7. Management is responsible for the preparation and presentation of the prospective financial information, including the identification and disclosure of the assumptions on which it is based.
Who assumes responsibility for financial statements?
Be- cause the principal auditor in this case assumes responsibility for his opinion on the financial statements on which he is reporting without making reference to the audit performed by the other auditor, his judgment must govern as to the extent of procedures to be undertaken. .
Is responsible for the preparation of prospective financial information?
SAE 3400 is not applicable to expression in general or narrative terms and the principles of standards on auditing should be used as much as possible by the auditor. Management is responsible for the preparation of prospective financial information and the auditor is required to validate and report on the same.
What does prospective financial information include?
4.5 “Prospective financial information” means information about future financial performance, future financial position, future cash flows, and future movements in equity based on assumptions about future events and courses of action .
What is PFI in audit?
Management’s prospective financial information (PFI) is often one of the primary inputs into a fair value estimate. Management is responsible for any PFI it creates. Auditors should review and challenge any budgets and forecasts provided by management.
What is the auditor’s responsibility in financial statements?
The auditor’s responsibility is to express an opinion on the financial statements .
What is management’s responsibility in regard to the financial statements?
Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting , including safeguarding of assets against unauthorized acquisition, use or disposition.
Who prepares prospective financial information?
7. Management is responsible for the preparation and presentation of the prospective financial information, including the identification and disclosure of the assumptions on which it is based.
What does prospective financial information not include?
Although prospective financial statements may cover a period that has partially expired, statements for periods that have completely expired are not considered to be prospective financial statements. Pro forma financial statements and partial presentations are not considered to be prospective financial statements.
Can a CA certify projected balance sheet?
Projected balance sheets can be prepared by the CAs but they cannot be certified by them as per the professional ethics prescribed by the Institute of Chartered Accountants of India, the governing body for CAs. ... Projected balance sheet is never signed by a CA. yes you can get service of balance sheet projection .
What is the difference between proforma and prospective financial statements?
Difference Between Pro Forma Financials and Financial Projections. ... Financial projections are built on a set of assumptions, and can be built from scratch for a startup company. Pro Forma financial statements on the other hand are based on your current financial statements , and then are changed based on one event.
What is the difference between a financial forecast and a financial projection?
Simply put, financial forecasts are what management expects to happen . Financial projections are what might happen in any number of hypothetical scenarios.
What is meant by prospective financial statements?
Prospective financial statements— Either financial forecasts or financial projections including the summaries of significant assumptions and accounting policies .
What is backtesting in audit?
Backtesting is the general method for seeing how well a strategy or model would have done ex-post . Backtesting assesses the viability of a trading strategy by discovering how it would play out using historical data. If backtesting works, traders and analysts may have the confidence to employ it going forward.
What are the 5 financial statement assertions?
The different financial statement assertions attested to by a company’s statement preparer include assertions of existence, completeness, rights and obligations, accuracy and valuation, and presentation and disclosure .
What is valuation of assets in auditing?
Valuation means estimation of various assets and liabilities . It is the duty of Auditor to confirm that assets and liabilities are appearing in the balance sheet exhibiting their proper and correct value. In the absence of proper valuation of assets and liabilities, they will exhibit either overvalued or under-valued.
