How Is Lack of Understanding of a Client's Knowledge and Industry

question 12

Multiple Choice

How is lack of understanding of a client's knowledge and industry linked to the auditor's business risk?

• A)sales and collection processes need to be carefully documented so that the auditor can assess the value of accounts receivable.
• B)failure to fully understand the nature of the client's transactions could result in litigation should the client fail.
• C)the auditor may not be adequately trained to understand the nature of the client's business and thus may conduct a poor quality audit.
• D)there may not be sufficient expertise assigned to the audit engagement,resulting in a lack of understanding of complex issues.