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A CPA Firm Knows That Clients Find It Difficult to Change

question 24

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A CPA firm knows that clients find it difficult to change auditors after a professional relationship has been in place for several years because the termination of an auditor often makes investors concerned about the trustworthiness of a company's financial statements.To take advantage of this fact,this CPA firm routinely bids on new audit engagements at a fee that is likely to be 25 percent lower than the fees bid by its competitors.The CPA firm plans to recoup this fee differential by steadily raising its fees to above-market rates in subsequent years.The CPA firm's policy creates:


Definitions:

Frame Alignment Theory

A sociological theory that explains how social movement organizations align their activities and goals with the interests and beliefs of potential new members to facilitate mobilization.

Relative Deprivation Theory

A sociological theory that explains feelings of discontent or injustice as derived from comparing one's situation against that of others perceived to be better off.

Civil Citizenship

The status or condition of being a member of a state, with associated rights and duties as defined by the state's laws and policies.

Rights Afforded

The privileges or entitlements granted to individuals or groups, often protected by law or social convention.

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