In connection with current problems relating to audited financial statements it has been stated that: The bulk of the problems can be traced to a single crucial flaw in the basic structure (of the financial disclosure process): despite the fact that audited financial statements are meant to report on managerial operation of owner resources, it is management that controls the content of these reports. The obvious question is: "What about the shareholders' auditor in this situa- tion?" My hypothesis is that the auditor is just not sufficiently independent to overcome the power position of management. Analyze and comment on the relative positions of and the causes of the potential conflict between management and the independent auditor.