An auditor who accepts an audit engagement and does not possess the industry expertise of the business entity, 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 to be able to carry out the audit effectively. While engaging financial experts or referring a substantial portion of the audit to another CPA are options, they may not always be practical and could result in additional costs to the client. Informing management that an unqualified opinion cannot be issued should only be done as a last resort after all other options have been exhausted.

An Auditor Who Accepts an Audit Engagement and Does Not