Question

An auditor who accepts an audit but does not possess the industry expertise of the business entity should _________.

• A. engage experts
• B. obtain knowledge of matters that relate to the nature of entity's business
• C. inform management about it
• D. take help of other auditors

Answer 1

Answer: (B)

obtain knowledge of matters that relate to the nature of entity's business

It is imperative for the auditor to have knowledge of the business before taking any audit.In case he does not have any knowledge, it is his duty to obtain knowledge of those matters which relate to the nature of entity's business.

Hence, informing the management of such ignorance or taking help of other auditors are not the solutions to this.

Note: Auditor may take help of experts in those matters in which he is not expected to have knowledge.