Auditors consider many factors when planning an audit. Answer each of the questions below regarding issues that may arise during the planning of an audit.

1. Auditors should consider whether they will need to employ specialists to assist them during the audit engagement. Give examples of two accounts for which auditors may need to employ a specialist. Explain your reasoning. (4)

2. Auditors should consider whether the engagement may need to involve other auditors/CPA firms. Explain why an audit engagement may require the involvement of other auditors. What factors should an auditor consider regarding any other auditors who will potentially be involved with the engagement. (4)

3. It is critical during audit planning to develop a thorough understanding of the clients product and service lines, critical business processes, and the industry in which the client operates. In the ZZZZ Best case, it was apparent that the auditors failed to obtain a proper understanding of the clients critical business processes and the nature of the industry for the building restoration contracts. Based on the facts of the case, give three examples which illustrate that the auditors failed to adequately understand the clients business/industry. (6)

4. Bethel Corporation manufactures advanced batteries that may be used to power electric cars and light machinery. You are planning the audit for Bethel and note the following issues. For each of these issues, explain whether you feel it would increase or decrease the risk associated with the Bethel engagement, and explain your reasoning. (6)

1. Bethel uses certain rare earth materials in its manufacturing processes. The market for these materials is primarily controlled by two large mining companies.

2. The majority of Bethels sales are made to three prominent companies. Several other companies compete with Bethel in the production and marketing of similar battery products, and the technology is advancing rapidly.