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Prospective financial information
Acceptance considerations
Guidance is given in ISAE 3400 The Examination of Prospective Financial
Information
Matter under consideration Reason
The intended use of the Information for external use will be relied upon by
information, such as internal third parties, potentially for making investment
management or external users decisions.
This makes it riskier for the accountant because
the consequences of inappropriate reports will be
more severe.
Whether the information will be Information for general distribution will potentially
for general or limited distribution result in the assignment being higher risk as a
larger audience will be relying on it.
The nature of the assumptions If information is best-estimate, it should be a
(e.g. best estimate or reasonable approximation as to what might
hypothetical) actually happen therefore lower risk.
Where the assumptions are hypothetical, they will
be more difficult to validate and therefore higher
risk.
The elements to be included in The engagement will be higher risk if the PFI
the information includes elements of which the accountant has
little knowledge or that are extremely complex or
highly subjective.
The external auditor is likely to have the greatest
understanding of the entity therefore would be best
placed to provide this service.
The period covered by the Short-term forecasts are likely to be more easily
information verified than projections looking out over a longer
period therefore less risky.
The acceptance matters covered in Chapter 6 should also be considered.
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