The Undue Influence Threat Exists When

question 33

Multiple Choice

The undue influence threat exists when:

• A) A client threatens to terminate a CPA firm during the course of performing an audit of the client's books
• B) An auditor provides a 10% fee reduction to a client who complained about the auditor's staff being inadequately trained
• C) An auditor pays the entire restaurant bill for a client business lunch at which interpersonal conflicts between one audit staff member and a client employee were addressed
• D) An auditor sends an exceedingly generous gift to the CEO of a client to celebrate her fifth-year anniversary as the CEO

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Definitions:

Venture Capital

Financing that investors provide to startup companies and small businesses with long-term growth potential.

Direct Cost

Expenses that can be directly traced to the production of specific goods or services, such as raw materials and labor costs.

Legal Fees

Expenses charged by lawyers or law firms for legal services provided.

Issuing Securities

This refers to the process by which corporations, governments, or other entities offer new stocks, bonds, or other financial instruments to the public to raise capital.