You are engaged by M/s Viva Limited to examine and report on prospective financial information which the management of the company has prepared for…

CA Final · Advanced Auditing, Assurance and Professional Ethics · MTP · November 2024
You are engaged by M/s Viva Limited to examine and report on prospective financial information which the management of the company has prepared for presentation at an Investor meet program organized by a State Government to attract investment in their state. The company in its vision document described various plans and proposals of the company with projected financial goals and means to achieve the same and various benefits accruing to the economic development of the State. What important matters will be considered by you while determining the nature, timing, and extent of examination procedure to be applied in the review of the same?

Suggested Answer and Working Notes:

As per SAE 3400, “The Examination of Prospective Financial Information", when determining the nature, timing and extent of examination procedures, the auditor should consider matters such as: (i) the knowledge obtained during any previous engagements; (ii) management's competence regarding the preparation of prospective financial information; (iii) the likelihood of material misstatement; (iv) the extent to which the prospective financial information is affected by the management's judgment; (v) the sources of information considered by the management for the purpose, their adequacy, reliability of the underlying data, including data derived from third parties, such as industry statistics, to support the assumptions; (vi) the stability of entity's business; and (vii) the engagement team's experience with the business and the industry in which the entity operates and with reporting on prospective financial information.

Topics: Standard on Auditing (SA)

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic