Question

Some chapters focussed on the audits of financial statements and other introduces other types of reports that include varying degrees of assurance, types of reports, requirement and general acceptance criteria before an auditor or public accountant can accept the engagement.

Required

Explain the main content of a report on a compilation of prospective information.

Answer 1

Prospective financial statements encompass financial forecasts and financial projections.

The standard report on a compilation of prospective financial statements should include the following:

a. An identification of the prospective financial statements presented by the responsible party.

b. A statement that the practitioner has compiled the prospective financial statements in accordance with attestation standards established by the American Institute of Certified Public Accountants.

c. A statement that a compilation is limited in scope and does not enable the practitioner to express an opinion or any other form of assurance on the prospective financial statements or the assumptions.

d. Whether the assumptions underlying the prospective financial statements provide a reasonable basis for the forecast or the projection.

e. A caveat that the prospective results may not be achieved.

f. A statement that the practitioner assumes no responsibility to update the report for events and circumstances occurring after the date of the report.

g. The manual or printed signature of the practitioner's form.

h. The date of the compilation report.