8-27

The following are various activities an auditor does during audit planning.

1. Review accounting principles unique to the clients industry

2. Determine the likely users of the financial statements

3. Evaluate the appropriate financial statement measures for determining amounts likely to be considered material by users of the financial statements

4. Identify whether any specialists are required for the engagement

5. Send an engagement letter to the client

6. Tour the clients plant and offices

7. Specify materiality levels to be used in testing of accounts receivable

8. Compare key ratios for the company to those for industry competitors

9. Review managements risk management controls and procedures

10. Identify potential related parties that may require disclosure