Question 3 - Part b

In this lesson

1. 0:00 Understanding audit evidence requirements
2. 0:28 Identifying five marks worth of evidence
3. 0:51 Structuring your audit evidence answer
4. 1:38 Evidence of buyer correspondence and negotiations
5. 2:33 Management discussions and growth rate justification
6. 4:12 Author consent and digitalisation timescales
7. 5:13 Chandler contract verification for book releases
8. 6:01 Recalculating Happy Travels valuation accuracy

About this lesson

This is a five-mark audit procedures question that requires you to move beyond vague statements and pinpoint the actual working papers and documentation an auditor would expect to find in the audit file. You'll discover how to link audit procedures directly to the evidence they produce, using the question details to identify realistic, substantive examples rather than generic answers. The lesson walks through five concrete pieces of audit evidence covering the key cash receipt items: correspondence with potential buyers of the Happy Travels range to verify the selling price and timescale; minutes of management discussions explaining the 2% growth rate assumption and supporting action plans; correspondence with authors regarding consent to digitise the book range; copies of contracts with Chandler confirming publication dates for books two and three; and a recalculation of the Happy Travels valuation using the client's stated method to verify the £6 million figure is arithmetically correct. You'll also learn the critical distinction between explanation and evidence listing. Whilst the question asks you to "explain," you're actually required to list five distinct pieces of evidence—one mark per valid point. The focus is on demonstrating audit judgement by selecting evidence that addresses the specific assumptions and risks embedded in the cash flow, not providing generic audit procedures. This approach ensures your answer is directly relevant to the question scenario and maximises marks efficiently.

Duration: 7m