The following are various activities an auditor does during audit planning.
Review accounting principles unique to the clients industry
Determine the likely users of the financial statements
Evaluate the appropriate financial statement measures for determining amounts likely to be considered material by users of the financial statements
Identify whether any specialists are required for the engagement
Send an engagement letter to the client
Tour the clients plant and offices
Specify materiality levels to be used in testing of accounts receivable
Compare key ratios for the company to those for industry competitors
Review managements risk management controls and procedures
Identify potential related parties that may require disclosure
For each procedure, indicate which of the first four parts of audit planning the procedure primarily relates to accept client and perform initial audit planning, understand the clients business and industry, perform preliminary analytical procedures, set preliminary judgment about materiality and performance materiality.
