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You are a third-year trainee accountant and you have found that you enjoy engaging with the new trainees and helping them understand the auditing process.

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You are a third-year trainee accountant and you have found that you enjoy engaging with the new trainees and helping them understand the auditing process. One of the newest trainees has come to you to ask you to help with her understanding of the Audit process. She has asked whether the following statements she made are correct or incorrect and the reason for this. 1. Once the engagement letter for a new audit client has been signed by the client, preliminary engagement activities can begin. 2. Determining the audit strategy is regarded as a preliminary audit engagement activity. 3. In terms of the ISAs, an audit engagement can only be accepted if the auditor has established with the client that the preconditions for an audit are present. 4. One of the preconditions for an audit is that there is an acknowledgement from management that there is compliance with the King IV report on corporate governance. 5. The auditor needs to negotiate with the management if management wants to impose a limitation on the scope of the auditor's work prior to accepting the audit engagement. The auditor needs to minimise the limitation as much as possible. 6. The management letter must not include a paragraph that states that the auditor is responsible for the detection of fraud but not the prevention. 7. The audit plan is best described as the nature, timing and extent of planned risk assessment procedures, 'further' and 'other' procedures. 8. Planning materiality for an audit is not changed once it has initially been set. 9. The auditor needs to authorise journal entries to correct factual misstatements when carrying out the concluding stage of the audit. 10. Determining relevant sample sizes will not be part of the audit strategy. 104 HAUD230-1-Jan-Jun2023-FA2-DE-V2-15122022 ANNEXURE I: FORMATIVE ASSESSMENT 2 REQUIRED: Indicate whether each of the above statements is correct or incorrect. If the statement is incorrect, state why

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