Choice "B" is correct. An auditor must consider the availability and adequacy of the client's accounting records and the integrity of management in deciding whether or not to accept a new audit engagement. A prospective client that is unwilling to provide all financial records would give the auditor cause for concern about both of these issues.
Choice "c" is incorrect. The auditor may apply acceptable alternative procedures to audit inventory.
Choice "a" is incorrect. The auditor can accept the engagement and obtain an understanding of the client's operations and industry after acceptance.
Choice "d" is incorrect. The CPA is required to make oral or written inquiries of the predecessor auditor before accepting an engagement. Oral inquiries are sufficient here.