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

---

Definitions:

Short-Run

The short-run in economics refers to a period during which at least one input, such as plant size, is fixed and cannot be changed.

Long-Run

A period of time in which all factors of production and costs are variable, allowing for full adjustment to changes.

Marginal Revenue

The increase in revenue from the sale of one more unit of a product or service.

Natural Monopoly

A market situation where a single supplier can provide a good or service more efficiently than any potential competitor, often due to high initial setup costs.