What is Prospective financial information?
In short
Prospective financial information is financial information about the future: forecasts, based on expected conditions, and projections, based on one or more hypothetical assumptions. Accountants can examine, compile or apply agreed-upon procedures to it.
Key takeaways
- An examination report gives an opinion on whether the information is presented in line with the guidelines and whether the assumptions provide a reasonable basis.
- Projections are restricted to parties negotiating directly with the entity.
- The accountant never vouches for whether the results will be achieved.
Where it's tested
AUD: Attestation & System and Organization Controls (SOC) Engagements — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A user auditor wants to rely on controls at a service organization for the entire audit period. Which report provides appropriate evidence?