The Adverse Interest Threat Exists When

question 2

Multiple Choice

The adverse interest threat exists when:

• A) A client sues its auditor for incompetence
• B) A CPA testifies in court, in response to a valid court subpoena, that it observed illegal activity taking place at the client's place of business
• C) A CPA voluntarily testifies in court that its client incorrectly recorded cash proceeds as nontaxable loan proceeds rather than as a taxable sale
• D) A CPA, in response to a formal SEC inquiry, states that it has serious concerns about the trustworthiness and candor of an audit client's CFO

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Definitions:

Activity Scheduling

A cognitive behavioral therapy technique involving the planning of positive activities to improve mood and reduce depression.

Exposure

A therapeutic technique used in treating anxiety disorders, involving gradual or direct confrontation with a feared situation, object, or thought without the intention to cause harm.

Behavioural Experiments

Techniques used in cognitive-behavioral therapy to test the beliefs of clients against reality and help reshape their cognitions through direct experience.

Antidepressant Properties

Characteristics of substances that can alleviate symptoms of depression by balancing chemicals in the brain.