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Good day,
Say that an auditor has been approached to audit a jeweler or a exotic stone miner……the firm has no previous experience auditing such a firm …can the audit be accepted on the basis that they will employ a expert (precious stone valuator etc.)? Or is it a case that once there is no previous experience in an industry the assignment can’t be accepted?
Thank you.
It seems to me that a main audit risk arises from inventory valuation and even auditors with lots of experience in the jewellery industry would not undertake to value gems. Apart from valuation of inventory, the rest of the business is a normal trading company and the risk would be addressed by obtaining an expert opinion on the value of the inventory. All auditors would do that. The assignment could be accepted.
It would be quire different if the auditor were approached by a bank to become auditor and there was no previous experience in banking. There the whole business is radically different and complex and the risk could no easily be reduced by employing outside experts. To safely accept this, the auditor would have to employ staff with bank audit experience and the partner in charge would need that experience too.
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