An auditor is planning the audit of a new client. The auditor notes that the client operates in a highly regulated industry with complex environmental liabilities. The auditor does not have previous experience in this industry. The auditor should:

Answer options:

Decline the engagement.

Obtain the necessary knowledge through training or by consulting with experts before performing the audit.

Rely on management's specialists for industry knowledge.

Perform the audit but disclose the lack of experience in the engagement letter.

How to approach this question

General Standard: Competence. You don't need to be an expert *before* accepting, but you must become one *during* the audit.

Full Answer

B.Obtain the necessary knowledge through training or by consulting with experts before performing the audit.✓ Correct

Obtain the necessary knowledge through training or by consulting with experts before performing the audit.

The auditor must possess or obtain the competence/knowledge required to perform the engagement. Lack of prior experience does not require declining the engagement, provided the auditor takes steps to obtain the necessary knowledge (e.g., training, research, consulting experts).

Common mistakes

Thinking you must already be an expert to accept a new client.

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