An accountant was asked by a potential client to perform a compilation of its financial statements. The accountant is not familiar with the industry in which the client operates. In this situation, which of the following actions is the accountant most likely to take?

a.

Postpone accepting the engagement until the accountant has obtained an adequate level of knowledge about the industry.

b.

Request that management engage an independent industry expert to consult with the accountant.

c.

Decline the engagement.

d.

Accept the engagement and obtain an adequate level of knowledge about the industry.

Question

Faith Saunders

Business

7 July, 02:10

An accountant was asked by a potential client to perform a compilation of its financial statements. The accountant is not familiar with the industry in which the client operates. In this situation, which of the following actions is the accountant most likely to take?

a.

Postpone accepting the engagement until the accountant has obtained an adequate level of knowledge about the industry.

b.

Request that management engage an independent industry expert to consult with the accountant.

c.

Decline the engagement.

d.

Accept the engagement and obtain an adequate level of knowledge about the industry.

+3

Answers (1)

Know the Answer?

Roderick Bonilla · Answer 1

The correct answer is d. Accept the engagement and obtain an adequate level of knowledge about the industry.

Explanation:

Lack of knowledge about a specific sector is not causal for the accountant not to take the assignment or project that is required to be carried out, since this task consists of a period of study about the different variables and the market that needs to be evaluated. In accounting terms, management is similar to other sectors, however, in case the accountant is totally unaware of what needs to be studied, the most appropriate thing is to take time to understand the dynamics.