Final answer:
Preliminary engagement activities in an audit include assessing audit risk, setting materiality, and may include evaluating internal controls, but not typically performing background checks on top management.
Step-by-step explanation:
Preliminary engagement activities are essential steps taken in the initial phase of an audit. They encompass various tasks that an auditor undertakes before the full audit commences. One such task includes assessing audit risk at the account balance level, which refers to the risk that an auditor may misstate financial statements. Another crucial task is setting materiality, which helps define the importance of the amounts involved in financial reporting. While evaluating internal controls does play a significant role in an audit, it is not always considered a preliminary activity but rather a part of audit planning and execution. Lastly, performing background checks on top management is not a standard preliminary activity in auditing but rather a part of a due diligence process, especially in cases of new clients or where there's been a significant change in management.