An auditor who accepts an audit engagement and does not possess expertise with respect to the business entity's industry, should:
A)engage financial experts familiar with the nature of the business entity.
B)obtain a knowledge of matters that relate to the nature of the entity's business.
C)refer a substantial portion of the audit to another CPA, who will act as the principal auditor.
D)first inform management that an unqualified opinion cannot be issued.

Question

Quizplus · Accepted Answer

The auditor should obtain a knowledge of matters that relate to the nature of the entity's business in order to properly plan and conduct the audit. While engaging financial experts or referring a portion of the audit to another CPA may be appropriate in certain situations, it is not the best choice in every case. Informing management that an unqualified opinion cannot be issued should only be done if there are material misstatements or other significant issues that prevent the auditor from issuing an opinion. Therefore, the best choice in this case is for the auditor to obtain knowledge of matters related to the entity's business.

An Auditor Who Accepts an Audit Engagement and Does Not