Conducting an audit in accordance with Generally Accepted Auditing Standards requires that the audit is properly planned, performing preliminary upfront analytical procedures, assessing the clients business risk and making sure that the auditors understand the clients business and industry.

(a) Identify and describe at least three aspects of proper audit planning and why they are important.

(b) Define what an analytical procedure is and give at least three procedures that should be performed and their purpose. For example, comparison of last years Allowance for Doubtful Accounts to this years Allowance for Doubtful accounts the amount has decreased by 25%, while sales have increased by 10% from last year. How might this affect how you look at Accounts Receivables and the related Allowance for Doubtful Accounts? Would you increase or decrease your audit procedures?

(c) Why does an auditor need to understand the clients business and their industry? Provide an industry and what risks may that industry pose to our client.