Key Topics: Acceptance procedures, capital expenditure forecast

Description: This requirement requires you to consider some forward looking forecast information in respect of a cashflow forecast.  You should consider the underlying assumptions and whether or not they are realistic as well as what type of evidence you would request from the client.  You should think about the audit evidence needed in respect of cash receipts, giving consideration to ethical, professional and practical issues.  The requirement also wants you to design some tests (assuming the non-audit work gets accepted) in respect of the forecast.  Assuming some of the issues are not resolved as expected, you will also then need to consider the impact of this on the auditor’s report, thinking about what type of audit opinion will be issued.