An Auditor Who Accepts an Audit Engagement and Does Not

question 14

Multiple Choice

An auditor who accepts an audit engagement and does not possess expertise with respect to the business entity's industry, 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.

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Definitions:

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used in statistical hypothesis testing and estimation.

Observations

The act of monitoring or recording systematically selected variables to gather data or insights.

Defect Rate

The proportion of defective items or errors found in a batch of products, used as a measure of quality in manufacturing processes.

Confidence

A feeling or belief that one can rely on someone or something; firm trust.