The following are various activities an auditor does during audit planning.
1. Send an engagement letter to the client.
2. Tour the client’s plant and offices.
3. Compare key ratios for the company to industry competitors.
4. Review management’s risk management controls and procedures.
5. Review accounting principles unique to the client’s industry.
6. Determine the likely users of the financial statements.
7. Identify potential related parties that may require disclosure.
8. Identify whether any specialists are required for the engagement.
Required
For each procedure, indicate which of the first four parts of audit planning the procedure primarily relates to: (1) accept client and perform initial audit planning; (2) understand the client’s business and industry; (3) assess client business risk; (4) perform preliminary analytical procedures.
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