Final answer:
Under the general standards rule, a CPA who does not have the required knowledge for an engagement must either decline the engagement or attain the necessary competence before proceeding. This ensures that CPAs only perform tasks with professional competence according to AICPA's Code of Professional Conduct.
Step-by-step explanation:
Under the general standards rule, if a CPA is offered an engagement for which he or she does not have the required knowledge, the CPA should either: decline the engagement due to lack of expertise, or obtain the necessary competence before accepting the engagement. This requirement is to ensure that CPAs only undertake work that they can complete with professional competence. The AICPA's Code of Professional Conduct outlines the necessity for technical competence and due care in the performance of professional services.
For instance, if a CPA is offered an engagement to audit a company that uses a complex financial instrument the CPA has no experience with, the CPA has two choices. They can either decline the engagement or engage in further study and training, or perhaps bring in specialists with the required expertise. Accepting an engagement without having the required knowledge can lead to substandard work and is against AICPA guidelines, which can in turn result in professional and legal ramifications for the CPA.
To illustrate, if a CPA without prior experience in international tax law is asked to advise a company on such matters, the CPA would need to carefully consider if they should undertake the engagement. Undertaking professional development courses in the subject or consulting with a knowledgeable colleague would be potential next steps if the CPA decides to accept the engagement, but this decision must be made with an understanding of the general standards rule and the importance of professional competence in mind.