Question 3 - Part a

In this lesson

1. 0:00 Evaluating management assumptions in cash flows
2. 1:03 Analysing sales growth assumptions
3. 2:35 Checking calculation accuracy in forecasts
4. 3:47 Assessing digital product launch feasibility
5. 5:01 Challenging Chandler book sales projections
6. 6:02 Scrutinising the Happy Travels sale valuation
7. 8:25 Identifying management bias and going concern risk
8. 9:22 Completeness issues in operating expenses
9. 10:09 Loan repayment timing and renegotiation concerns
10. 12:43 Conclusion: professional scepticism in audit judgement

About this lesson

The video walks through a detailed answer to Part A of an exam question, showing you how to identify and justify ten separate points of challenge across the forecast. You'll see how to examine specific assumptions like sales growth rates, product launch timelines, asset sale valuations, and loan repayment terms, then explain why each one is unrealistic or incomplete. The tutor demonstrates the importance of checking actual calculations against stated assumptions, spotting inconsistencies, and recognising when management bias might be influencing the numbers. A key theme throughout is applying professional scepticism—not just identifying errors, but understanding the motivation behind them. You'll learn how to connect assumptions back to the underlying audit objective (going concern) and conclude that overoptimistic forecasting may be deliberate. The lesson shows you how to structure your answer logically, earn both content marks and professional marks, and manage your time by targeting the required number of points rather than exhausting every possible observation.

Duration: 14m