Court actions in the last decade and a half have resulted in an increasingly complex legal environment for the independent auditor. The ordinary amount of class time available to auditing instructors is too short to cover book-length treatments of this environment. This paper presents and describes a matrix which has proved useful in concisely describing many of the subtleties of the environment.

The American Institute of Certified Public Accountants has indicated that auditor independence, both actual and perceived, is necessary to maximize the benefit of auditor association. This paper reports the results of a study of stockholder perceptions of the effect of relative client size, gifts, and purchase discount arrangements on auditor independence. The findings indicate that gifts and discount arrangements of even a minimal amount significantly affected users' perceptions of auditor independence. The effect of client size was not significant.