Question

You are a CPA on an audit engagement for Spotway Manufacturing. You are approached by the client who tries to pressure you to drop your request to adjust revenues. Which of the following is the threat this represents to auditor independence?

1) Familiarity threat
2) Adverse interest threat
3) Undue influence threat
4) Advocacy threat

Answer 1

The client's attempt to pressure the CPA to drop the revenue adjustment request represents an undue influence threat to auditor independence.

Step-by-step explanation:

If you are approached by a client who tries to pressure you to drop your request to adjust revenues as a CPA on an audit engagement for Spotway Manufacturing, this represents an undue influence threat to auditor independence. This type of threat occurs when a client attempts to coerce, manipulate, or otherwise exert pressure on the auditor to influence the audit outcome. It's vital for the integrity of financial reporting and the auditing profession that auditors remain free from influences that might compromise their objectivity and professional skepticism.