This leads to a delicate balancing act caused by the peculiar circumstance of the accounting firm legally representing the public, but being paid by the company being audited.

Some countries have put a monetary cap on legal liability, while others have adopted limits based on the size of the client corporation or the fees generated by the company being audited.

It said that in two cases, "we concluded there was sufficient doubt as to whether" the company being audited had applied the correct accounting treatment or made appropriate disclosures.

Since the 1930's S.E.C. and accounting profession rules have barred auditors from having investments in companies audited by their firms.

That led to an S.E.C. censure of the firm and a finding that three people in the Tampa office had owned stock in four companies audited by that office.

They covered only companies audited by the four big accounting firms.

This audit is an analysis of the innovative abilities of the company being audited, in comparison to its competitors.

The lower performance of shares in companies audited by Andersen from November through April may reflect, in part, a greater loss of confidence in those companies by investors.

Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors.

In the last year, securities regulators have become increasingly concerned about auditing quality because of the growing number of accounting frauds at public companies audited by the big firms.