Final answer:
In auditing, statement C is false, as specialists can have a relationship with the client provided that it is properly managed. Auditors must understand the methods used by the specialist and test their data, while also evaluating the specialist's qualifications and potential biases.
Step-by-step explanation:
Regarding the auditor using the work of a specialist, the false statement is C. It is unacceptable for the specialist to have a relationship with the client. While it is important for a specialist to maintain objectivity, having a relationship with the client is not in itself unacceptable; however, the relationship should be appropriately managed to avoid threats to independence. The auditor indeed must obtain an understanding of the methods or assumptions used by the specialist as well as evaluate their professional qualifications and reputation. It is also true that the auditor should test the data furnished by the specialist.
Evaluating the work of a specialist involves careful consideration, including the assessment of whether the person supplying the testimony is an expert in the relevant field. Auditors need to determine if there’s a consensus among experts in the relevant field and if the person's testimony aligns with this consensus. Identifying potential biases is also crucial to prevent conflict of interest and ensure the credibility of the specialist's work. These considerations align well with the use of critical skills when evaluating materials from various sources, where it is necessary to assess the author's qualifications and potential biases.