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

The following are various activities an auditor does during
audit planning.
1. Review accounting principles unique to the client’s 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 client’s 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 management’s risk management controls and procedures
10. Identify potential related parties that may require disclosure
For each procedure, indicate which of the first four parts of audit planning the procedure primarily relates to (1) accept client and perform initial audit planning, (2) understand the client’s business and industry, (3) perform preliminary analytical procedures, (4) set preliminary judgment about materiality and performance materiality.

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