Question 4 CAS 315 requires auditors to have a good knowledge of a client's business and the industry(ies) in which the client operates. As a result, obtaining such knowledge is a crucial part of engagement planning.

Required:

a. Knowledge of the business is necessary to provide a basis for specific audit judgments, decisions, and procedures. For example, knowledge of the business is needed to assess the appropriateness of management's selection and application of accounting principles, and to evaluate management's overall financial statement presentation. List four other components of an audit in which knowledge of the business is necessary. Note: If more than four components are listed, only the first four will be marked.

b. When planning an engagement, an auditor is likely to consider the tax status of the client's industry, any special tax considerations, and the industry's GST (Goods & Services Tax) and PST (Provincial Sales Tax) status. Identify four other aspects of a client's industry that an auditor is likely to consider in engagement planning.