A CPA Firm Knows That Clients Find It Difficult to Change

Multiple Choice

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:

A) A current conflict of interest
B) A foreseeable future conflict of interest
C) An appearance of a conflict of interest, but not an actual one
D) No conflict of interest