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Assessing the reasonableness of Work In Progress (WIP) evaluations is crucial for ensuring that the financial statements reflect a true and fair view of a company's financial health. Discussing percentage completions with management is a key audit procedure in this context because it helps auditors understand how management determines the progress of projects or production processes that are not yet completed.

By engaging in discussions with management, auditors can gain insights into the methods used to calculate percentage completions, the assumptions made, and the bases for any estimates applied. This procedural dialogue helps to validate whether the WIP valuations are appropriate in light of actual progress, costs incurred, and overall project status. It enables auditors to evaluate the reasonableness and consistency of these estimates in relation to the financial reporting framework being applied.

While reviewing product sales forecasts, inspecting employee performance reviews, and analyzing historical profit margins may provide valuable information, these procedures do not directly assess the status of WIP calculations or the specific methodologies management uses to determine completion percentages. Thus, they are not as focused and effective for evaluating the appropriateness of WIP valuations as discussing percentage completions directly with management.