Vishnu & Co. is in process to issue a prospectus containing projected financial statements to provide information about future expectations of…

Projected Financial Statements: As per SAE 3400, “The Examination of Prospective Financial Information”, before accepting an engagement to examine prospective financial information, the auditor would consider, amongst other things: the intended use of the information;whether the information will be for general or limited distribution;the nature of the assumptions, that is, whether they are best-estimates or hypothetical assumptions;the elements to be included in the information; andthe period covered by the information. Further, the auditor should not accept, or should withdraw from, an engagement when the assumptions are clearly unrealistic or when the auditor believes that the prospective financial information will be inappropriate for its intended use. The auditor should consider the extent to which reliance on the entity's historical financial information is justified. Like in other engagements, it is necessary that terms of engagements should be agreed with client by sending an engagement letter.