The following circumstances all relate to the same case and are listed chronologically as the fact pattern builds. Respond to each question as best you can based on the information provided.

1. You recently proposed on a public company's audit and won the bid with the new client. You have completed your firm's internal risk assessment process for acceptance and it is considered a low risk engagement. Assuming the fees have been negotiated, what is the first step you should take?
2. You have started working on planning and you are setting an overall materiality threshold. What is the primary item to consider when determining relevant benchmark(s) to use for calculating materiality?
3. You've concluded that pre-tax income is the relevant benchmark you will use to calculate overall materiality and you are now trying to calculate performance materiality (PM)... what is one factor you need to consider in setting PM (i.e. applying a haircute to overall materiality)?
4. For all the responses in question 4, assume the following: client is a manufacturer of oil related tools. The inventory is counted monthly and there is good separation of duties for all functions. The control environment is well designed and operates effectively. There could be some upchanges in the industry that puts some of their inventory at risk for obsolescence. Based on this information, respond to the following questions:
4a. Your new What type of controls reliance do you plan to take?
4b. What is the planned level of substantive procedures around the physical existence of inventory?
4c. What is the planned level of substantive procedures around the valuation assertion for inventory?
5. You are now wrapping up your audit and working on completion procedures. One of the procedures required by the auditing standards is to perform conclusion (completion) analytical procedures. What is the purpose of these analytical procedures?
6. You are trying to ensure completeness of Management's listing of all contingent liabilities (contingencies) - name at least one procedure you would perform to aid you in verifying completeness of contingencies?
7.Through discussion with Management, you are made aware of pending litigation from the year under audit that has had recent developments occur. When you confirm this litigation with outside legal counsel, the letter they respond with states that they believe it is probable the client will be liable for a settlement amount and provides a range of expected settlement of the case. What actions should the client take in regards to this information?
8.What is the very last item that you need to obtain from your client prior to releasing your opinion?