If a large portion of a firm's fees comes from a single assurance client, what threat does that create?

A situation where a significant portion of a firm's fees is derived from a single assurance client creates a self-interest threat. This occurs because the auditor may become overly reliant on that client for revenue, which could compromise their objectivity and professional judgment. The potential financial dependence on that client might influence the auditor's decisions, leading to a conflict between the auditor's financial interests and their duty to provide an unbiased opinion.

When auditors face a self-interest threat, there may be a temptation to align their assessments and conclusions with what might be perceived as favorable for the client in order to maintain the financial relationship, thereby jeopardizing the integrity of the audit process. This situation underscores the importance of maintaining independence and managing client relationships carefully to avoid compromising audit quality.