Final answer:
The internal auditor should decline engagements they lack the knowledge for, but should accept engagements that add value, have no conflict with policies, and are allowed by the internal audit charter.
Step-by-step explanation:
The internal auditor should decline to perform engagements in which the internal audit staff lacks the knowledge needed to perform part of the engagement [option A]. This is because it is important for the internal auditor to have the necessary expertise to carry out the consulting engagement effectively. If the internal audit staff lacks the required knowledge, they may not be able to provide accurate and reliable advice to the organization.
On the other hand, the internal auditor should accept engagements that add value and promote the best interests of the organization [option B]. These types of consulting engagements help improve the organization's operations and overall performance.
The internal auditor should also accept engagements that have no conflict with the policies and procedures of the internal audit activity [option C]. These engagements align with the internal audit function's objectives and contribute to its effectiveness.
Lastly, the internal auditor should accept engagements that are allowed by the terms of the internal audit charter [option D]. The internal audit charter sets out the scope and authority of the internal audit function, and engagements that fall within its purview should be accepted.