1. Define Specialized Industries as per AASC.

A specialized industry is a distinct market that has a unique way of accounting for
transactions and reporting its financial results. These are likely either to have specific  financial
reporting standards applicable to them, or to have distinct accounting  policies which have been
developed to account for specialized transactions and balances which are based on the normally-
applied financial reporting standards. Such instances of specialized transactions are airlines
companies, insurance companies, banking and financial institutions. real estate, business process
outsourcing (BPO) entities, constructions on contracting companies. 

2. What are the audit consideration in auditing specialized industries? Briefly explain each.

1. Competence

The audit firm needs to pay close attention to the competence of the audit firm to provide
the service. Furthermore, it must be considered also If such a firm is competent  to perform the
engagement and has the capabilities, including time and resources to do so. Further, audit
personnels must have the knowledge of the industries and have the expertise and necessary skills
to perform the audit. 

2. Auditing Planning

The identification of the risk of material misstatement in a specialized industry that will
be obtaining appropriate understanding of the business and its environment. 

3. Reliance on experts

The auditor may plan to use an auditor's expert to obtain audit evidence. This is quite
likely in a specialized industry as despite being competent to perform the engagement, the audit
firm may not have the necessary specific expertise in some areas.