You are the senior auditor with JPT Chartered Professional Accountants. You have been involved with the audit of Clean Energy Supply (CES) since JPT was appointed auditors in 2014. CES provides utilities to residential and commercial businesses. CES is a publically traded company whose shares are listed on the TSX. Until 2016, CES's main operations were in Ontario and Quebec.
In 2016, management engaged in aggressive expansion plans in Western Canada as a result of sales declines of the past two years. To finance this expansion, $25 million of common shares were issued.. To date, expansion plans have fell behind plan due to a labour dispute that arose mid-2016. The expansion has also been plagued with cost overruns. Additional financing may be required.
Western Canada has also been impacted by decline in oil prices. Many of the businesses that supported the oil industry have scaled down their operations. The labour force in Western Canada have reached all time lows.
Selected financial information (000's) is as follows:

* After restructuring costs of $5 million in 2016
CAS 315 requires that auditors identify industry and firm specific risks as part of understanding the entity and its environment. Identify one firm specific risk and one industry risk that impact CES. - see CAS 315 as a reference
Determine an appropriate planning materiality
Discuss the users and their information needs, qualitative and quantitative factors and make a recommendation consistent with the key users and their information needs as it relates to materiality.
Discuss what would be an appropriate base for performance materiality. Be sure to fully support your final recommendation.

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Revenues Total Assets Net Income* Gross Margin Gross Equity 2016 2015 2014 draft audited audited 26,500 29,000 36,000 98,000 75,000 72,000 5,000 12,500 15,000 22,000 28,000 33,000 72,000 52,000 50,000