Question 3 - Set up

In this lesson

1. 0:00 Completion phase audit overview
2. 1:02 Part A: Evaluating assumptions and completeness
3. 2:10 Understanding the client context
4. 5:26 Analysing the cash flow forecast
5. 7:01 Challenging assumptions with professional scepticism
6. 9:05 Part B: Audit evidence for cash receipts
7. 13:33 Part C: Audit opinion and going concern
8. 16:51 Time management and marking strategy

About this lesson

You'll discover how to evaluate management's assumptions in a cash flow forecast, identify missing items, and apply professional scepticism to challenge forecasted figures with precision and commercial judgment. The lesson walks you through a realistic case study involving Gala, a book and magazine publisher facing significant financial challenges including declining revenue, liquidity pressures, and an upcoming loan repayment. You'll learn how to systematically compare audit working papers against the cash flow forecast to spot weaknesses in assumptions. The key technique is marrying what you know about the client's actual position with what they've included in their forecast—this comparison is what enables you to make relevant, high-value challenges. The examiner rewards one mark per separate, well-justified point, so the lesson emphasises generating ten distinct challenges rather than generic observations. You'll also explore Part B, which requires you to identify specific pieces of audit evidence you'd expect to find in the working papers to support the forecasted cash receipts. The critical distinction here is that you're auditing a forecast, not historical figures, so your evidence must be realistic and client-specific—think contracts, calculations of historical payment patterns, board minutes, and management discussions rather than bank statements. Finally, the lesson covers Part C on audit opinions and going concern paragraphs, where you'll learn to exercise judgment about materiality and pervasiveness, and how to justify your opinion with commercial acumen. Throughout, you'll discover how to manage the 45-minute time allocation effectively and avoid the common pitfalls the examiner highlighted: generic points, lack of client specificity, and confusion about audit opinion types. This question is a strong opportunity to demonstrate professional scepticism, analytical skills, and commercial understanding.

Duration: 18m