When an auditor accepts an audit engagement but does not possess the industry expertise of the business entity involved,the auditor 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

Obtaining a knowledge of matters that relate to the nature of the entity's business is essential for an auditor who lacks industry expertise. This step is crucial for understanding the business and its environment, which impacts the audit approach and procedures. Engaging experts, referring the audit, or preemptively discussing opinion limitations are not initial or necessary steps solely due to a lack of industry expertise.

When an Auditor Accepts an Audit Engagement but Does not