Problem
I. What makes industries specialized is that they 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.
For each of the following sectors, discuss the distinct accounting policies or financial reporting standards developed to account for the specialized transactions.
i. Real estate
ii. Oil extraction
iii. Airline
II. The audit of a client in a specialized industry can pose some challenges to the audit firm. What are the considerations when auditing clients in a specialized industry? Discuss each briefly.