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NATURE OF THE ENGAGEMENT
Prospective financial
information can be in
the form of forecast or
projection. Forecast
is “prospective
financial information
prepared on the basis of
assumptions [i.e.
best-estimate
assumptions] as to
future events management
expects to take place
and the actions
management expects to
take as of the date of
the information is
prepared” .
Projection is
“prospective financial
information prepared
either on the basis of
hypothetical assumptions
about future events and
management actions which
are not necessarily
expected to take place
[for example;
assumptions made when an
entity is in a start-up
phase] or on the basis
of a mixture of
best-estimate
assumptions and
hypothetical
assumptions.
This engagement is
carried out in
accordance with “international
standards on examination
of prospective financial
information” issued
by IAASB(1)
of IFAC(2).
The purpose of the
examination
is to state whether
anything has come to our
attention that causes us
to believe that the
assumptions do not
provide a reasonable
basis, and to express an
opinion as to whether
the financial
information is prepared
on the basis of these
assumptions and
presented in accordance
with the relevant
financial reporting
framework.
At completion of the
engagement, an
“independent examination
report” is submitted to
our client. Naturally,
the report is prepared
in accordance with the
standard mentioned in
the first paragraph and
includes a summary of
nature of our
examination work.
Footnotes:
(1) IAASB:
International Auditing
and Assurance Standards
Board
(2)
IFAC: International
Federation of
Accountants
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