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Acca P7: Click To Edit Master Subtitle Style
Acca P7: Click To Edit Master Subtitle Style
4/15/12
4/15/12
A reporting accountant may be asked to provide an opinion on prospective (future) information in the form of a forecast and / or projection (ISAE 3400 is the authoritative standard in this area).
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P.F.I financial information based on assumptions about events that may occur in the future and possible actions by the entity.
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Projection PFI based on hypothetical assumptions about future events that may or may not take place or based on a combination of best-estimate and hypothetical assumptions.
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PFI engagement
Prior to acceptance of a PFI engagement , the auditor must consider : 1) the intended users 2) whether the information will be for general or limited distribution 3) the nature of assumptions : best estimate or hypothetical ?
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Assess source and reliability of managements best-estimate assumptions. Are they reliable and realistic ? Are forecasts and supporting schedules arithmetically correct ? Are the consistent with mgmts plan ? 4/15/12
PFI
Definitions
P.F.I financial information based on assumptions about
future events. Forecast period not exceeding 1 year. Projection - period 2- 5 years. Hypothetical illustration - Depiction of anticipated outcome. Target - Desired future outcome.
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P.F.I- Principles
Users Internal and External Presentation Useful, state assumptions , mixture of formats Preparation- make assumptions, define accounting policies , prepare PFI, Issue PFI.
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General check arithmetical accuracy Specific compare anticipated revenues with trends.
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Before acceptance - whats the risk? Level of assurance - impossible to verify future events . Can only comment on reasonableness of assumptions. Nature , extent, timing of procedures.
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PFI - report
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