On September 3, 20X1, Larkin, CPA, was engaged to audit the financial statements of Precious Metals Co. (PM), for he year ended October 31, 20X1. PM purchases precious metals at wholesale prices and resells them to craft clubs at retail. PM is a new client whose common stock was first offered to the public five years ago. PM received an unqualified opinion on its financial statements in each of the prior three years, but changes auditors after each engagement. In accepting the engagement, Larkin completed all of the appropriate client acceptance procedures. Larkin instructed Johnson, an assistant on the engagement, to draft a planning checklist that would assist Larkin in preparing the audit staff for the fieldwork that is scheduled to begin on October 17, 20X1. On October 5, 20X1. Johnson prepared the planning checklist below (engagement letter points have been omitted). Indicate the inappropriate points that are included on Johnson's planning checklist. 1. Understanding the engagement In planning the audit, have the engagement personnel considered: 11. PM's accounting policies and procedures? Financial statement items likely to require adjustment? The nature of the reports expected to be rendered? The effects of accounting and auditing pronouncements, particularly new ones? Methods of audit sampling to be used? Whether the method of sampling is likely to be approved by PM? The extent of involvement of other independent auditors or internal auditors? Procedures to evaluate competence and objectivity of PM's internal auditors? In planning the audit, have engaged personnel discussed: The general scope and timing of the audit work with PM's management, board of directors, or audit committee? The risk of misstatement due to fraud for each assertion for each account with PM's management, board of directors, and the audit committee? 10. 12. II. Assigning personnel to the engagement Has a time budget for the engagement been prepared to determine the staffing requirements and to schedule the network, and has it been approved bye The engagement partner? PM's controller and audit committee? Has the engagement staffing schedule been approved by the engagement partner? Have the following factors been considered: 14. Engagement size and complexity? Personnel available? 16. Timing of the work to be performed?