SAE 3400 Prospective FI
SAE 3400
The Examination of Prospective
Financial Information
(Effective in relation to reports on
projections/forecasts issued on or after April 1, 2007)
Contents
Paragraph(s)
Introduction ............................................................................................ 1-7
The Auditor’s Assurance Regarding
Prospective Financial Information .......................................................... 8-9
Acceptance of Engagement ............................................................... 10-12
Knowledge of the Business ................................................................ 13-15
Period Covered ....................................................................................... 16
Examination Procedures .................................................................... 17-25
Presentation and Disclosure ................................................................... 26
Documentation ........................................................................................ 27
Report on Examination of Prospective Financial Information ............ 28-34
Effective Date .......................................................................................... 35
Appendices
Standard on Assurance Engagements (SAE) 3400, “The Examination of
Prospective Financial Information” should be read in the context of the
“Preface to the Standards on Quality Control, Auditing, Review, Other
Assurance and Related Services”, which sets out the authority of the
Engagement Standards.
Issued in February, 2007. Pursuant to issuance of SAE 3400, the Guidance Note on Accountant’s
Report on Profit Forecasts and/or Financial Forecasts, issued in September, 1982 has been
withdrawn.
Introduction
1. The purpose of this Standard on Assurance Engagement (SAE) is to
establish standards and provide guidance on engagements to examine and
report on prospective financial information including examination procedures for
best-estimate and hypothetical assumptions. This SAE does not apply to the
examination of prospective financial information expressed in general or
narrative terms, such as that found in management’s discussion and analysis in
an entity’s annual report, though many of the procedures outlined herein may be
suitable for such an examination1. Further, the principles laid down in the other
Standards on Auditing, issued by the Institute of Chartered Accountants of India,
should be used by the auditor, to the extent practicable, in applying this SAE.
2. In an engagement to examine prospective financial information, the
auditor2 should obtain sufficient appropriate evidence as to whether:
(a) management’s best-estimate assumptions on which the prospective
financial information is based are not unreasonable and, in the case of
hypothetical assumptions, such assumptions are consistent with the
purpose of the information;
(b) the prospective financial information is properly prepared on the
basis of the assumptions;
(c) the prospective financial information is properly presented and all
material assumptions are adequately disclosed, including a clear
indication as to whether they are best-estimate assumptions or
hypothetical assumptions; and
1 The guidance provided in this Standard is in line with the provisions of clause (3) of Part I of the
Second Schedule to the Chartered Accountants Act, 1949 [as amended by the Chartered
Accountants (Amendment) Act, 2006]. This clause provides that a chartered accountant in practice
shall be deemed to be guilty of professional misconduct “if he permits his name or the name of his
firm to be used in connection with an estimate of earnings contingent upon future transactions in a
manner which may lead to the belief that he vouches for the accuracy of the forecast.” As per the
opinion of the Council while finalising the Guidance Note on Accountant’s Report on Profit
Forecasts and/or Financial Forecasts at its 100th meeting held on 22nd through 24th July 1982, a
chartered accountant can participate in the preparation of profit or financial forecasts and can
review them, provided he indicates clearly in his report the sources of information, the basis of
forecasts and also the major assumptions made in arriving at the forecasts and so long as he
does not vouch for the accuracy of the forecasts. The Council has further opined that the same
opinion would also apply to projections made on the basis of hypothetical assumptions about future
events and management actions which are not necessarily expected to take place so long as the
auditor does not vouch for the accuracy of the projection. (emphasis added)
2 The term “auditor” is used throughout this SAE when describing services involving examination
of prospective financial information. Such reference is not intended to imply that a member
performing such services need necessarily be the statutory auditor of the entity’s financial
statements.
SAE 3400 202
(d) the prospective financial information is prepared on a consistent
basis with historical financial statements, using appropriate
accounting principles.
3. “Prospective financial information” means financial information based on
assumptions about events that may occur in the future and possible actions by
an entity. It is highly subjective in nature and its preparation requires the exercise
of considerable judgment. Prospective financial information can be in the form of
a forecast, a projection, or a combination of both, for example, a one year
forecast plus a five year projection.
4. A “forecast” means prospective financial information prepared on the basis
of assumptions as to future events which management expects to take place and
the actions management expects to take as of the date the information is
prepared (best-estimate assumptions).
5. A “projection” means prospective financial information prepared on the
basis of:
(a) hypothetical assumptions about future events and management actions
which are not necessarily expected to take place, such as when some
entities are in a start-up phase or are considering a major change in the
nature of operations; or
(b) a mixture of best-estimate and hypothetical assumptions.
Such information illustrates the possible consequences as of the date the
information is prepared if the events and actions were to occur (a “what-if”
scenario).
6. Prospective financial information can include financial statements or one or
more elements of financial statements and may be prepared:
(a) as an internal management tool, for example, to assist in evaluating a
possible capital investment; or
(b) for the distribution/submission to third parties in, for example:
a prospectus to provide potential investors with information about
future expectations.
an annual report to provide information to shareholders, regulatory
bodies and other interested parties.
a document, for example, cash flow forecasts, for the information of
lenders.
7. Management is responsible for the preparation and presentation of the
prospective financial information, including the identification and disclosure of the
sources of information, the basis of forecasts and the underlying assumptions.
The auditor may be asked to examine and report on the prospective financial
information to enhance its credibility, whether it is intended for use by third
parties or for internal purposes.
The Auditor’s Assurance Regarding Prospective Financial
Information
8. Prospective financial information relates to events and actions that have not
yet occurred and might not occur. While evidence may be available to support
the assumptions on which the prospective financial information is based, such
evidence is itself generally future- oriented and, therefore, speculative in nature,
as distinct from the evidence ordinarily available in the examination of historical
financial information. The auditor is, therefore, not in a position to express an
opinion as to whether the results shown in the prospective financial information
will be achieved.
9. Further, given the types of evidence available in assessing the assumptions
on which the prospective financial information is based, it may be difficult for the
auditor to obtain a level of satisfaction sufficient to provide a positive expression
of opinion that the assumptions are free of material misstatement. Consequently,
in this SAE, when reporting on the reasonableness of management’s
assumptions, the auditor provides only a moderate level of assurance.
Acceptance of Engagement
10. 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; and
the period covered by the information.
11. 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.
12. In accordance with SA 210, “Terms of Audit Engagement”, it is
necessary that the auditor and the client should agree on the terms of the
engagement. It is in the interest of both client and auditor that the auditor sends
an engagement letter to help in avoiding misunderstandings regarding the
engagement. An engagement letter would address the matters in paragraph 10
and set out the management’s responsibilities for the assumptions and for
SAE 3400 204
providing the auditor with all relevant information and source data used in
developing the assumptions.
Knowledge of the Business
13. The auditor should obtain a sufficient level of knowledge of the
business to be able to evaluate whether all significant assumptions
required for the preparation of the prospective financial information have
been identified. The auditor would also need to become familiar with the entity’s
process for preparing prospective financial information, for example, by
considering:
(a) The internal controls over the system used to prepare prospective financial
information and the expertise and experience of those persons preparing the
prospective financial information.
(b) The nature of the documentation prepared by the entity supporting
management’s assumptions.
(c) The extent to which statistical, mathematical and computer-assisted
techniques are used.
(d) The methods used to develop and apply assumptions.
(e) The accuracy of prospective financial information prepared in prior periods, if
any, and the reasons for any significant variances therein.
14. The auditor should consider the extent to which reliance on the
entity’s historical financial information is justified. The auditor requires
knowledge of the entity’s historical financial information to assess whether the
prospective financial information has been prepared on a basis consistent with
the historical financial information and to provide a historical yardstick for
considering management’s assumptions. The auditor will need to establish, for
example, whether relevant historical information was audited or reviewed and
whether acceptable accounting principles were used in its preparation.
15. If the audit or review report on prior period historical financial information
was other than a clean report3 or if the entity is in a start-up/expansion phase,
the auditor would consider the relevant facts and the effect on the examination of
the prospective financial information.
Period Covered
16. The auditor should consider the period of time covered by the
prospective financial information. Since assumptions become more
speculative as the length of the period covered increases, as that period
3 Alternatively known as the unmodified report in terms of the Standard on Auditing (SA)
700(Revised), “Forming an Opinion and Reporting on Financial Statements”.
lengthens, the ability of management to make best-estimate assumptions
decreases. The period would not extend beyond the time for which management
has a reasonable basis for the assumptions. The following are some of the
factors that are relevant to the auditor’s consideration of the period of time
covered by the prospective financial information:
(a) The operating cycle, for example, in the case of a major construction project
undertaken by a construction company, the time required to complete the
project may dictate the period covered.
(b) The degree of reliability of assumptions, for example, if the entity is
introducing a new product, the prospective period covered could be short
and broken into small segments, such as weeks or months. Alternatively, if
for example, the entity’s sole business is owning a property under long-term
lease, a relatively long prospective period might be reasonable.
(c) The needs of users, for example, prospective financial information may be
prepared in connection with an application for a loan for the period of time
required to generate sufficient funds for repayment. Alternatively, the
information may be prepared for investors in connection with the issue of
securities to illustrate the intended use of the proceeds in the subsequent
period.
Examination Procedures
17. When determining the nature, timing and extent of examination
procedures, the auditor should consider matters such as:
(a) the knowledge obtained during any previous engagements;
(b) management’s competence regarding the preparation of prospective
financial information;
(c) the likelihood of material misstatement;
(d) the extent to which the prospective financial information is affected by
the management’s judgment;
(e) 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;
(f) the stability of entity’s business; and
(g) the engagement team’s experience with the business and the industry
in which the entity operates and with reporting on prospective
financial information.
18. The auditor would assess the source and reliability of the evidence
supporting management’s best-estimate assumptions. Sufficient appropriate
evidence supporting such assumptions would be obtained from internal and
SAE 3400 206
external sources including consideration of the assumptions in the light of
historical information and an evaluation of whether they are based on plans that
are within the entity’s capacity. Examples of external sources are government
publications, industry publications, economic forecast, existing or proposed
legislation, and reports of changing technology. Examples of internal sources
are budgets, the economic substance and viability of the entity and/or transaction
or project of the entity, reputation of management responsible for assumptions
underlying the prospective financial information, wage agreements, patents,
royalty agreements and records, sales backlog records, debt agreements, and
actions of the board of directors involving entity plans, etc.
19. The auditor would consider whether, when hypothetical assumptions are
used, all significant implications of such assumptions have been taken into
consideration. For example, if sales are assumed to grow beyond the entity’s
current plant capacity, the prospective financial information will need to include
the necessary investment in the additional plant capacity or the costs of
alternative means of meeting the anticipated sales, such as subcontracting
production.
20. The auditor would need to be satisfied that the hypothetical assumptions
are consistent with the purpose of the prospective financial information and that
there is no reason to believe they are clearly unrealistic.
21. The auditor will need to be satisfied that the prospective financial
information is properly prepared from management’s assumptions by, for
example, making checks such as recomputation and reviewing internal
consistency, that is, the actions management intends to take are compatible with
each other and there are no inconsistencies in the determination of the amounts
that are based on common variables such as interest rates.
22. The auditor would focus on the extent to which those areas that are
particularly sensitive to variation will have a material effect on the results shown
in the prospective financial information. This will influence the extent to which the
auditor will seek appropriate evidence. It will also influence the auditor’s
evaluation of the appropriateness and adequacy of disclosure.
23. When engaged to examine one or more elements of prospective financial
information, such as an individual financial statement, it is important that the
auditor considers the interrelationship of other components in the financial
statements.
24. When any elapsed portion of the current period is included in the
prospective financial information, the auditor would consider the extent to which
procedures need to be applied to the historical information. Procedures will vary
depending on the circumstances, for example, how much of the prospective
period has elapsed.
25. The auditor should obtain written representations from management
regarding the intended use of the prospective financial information, the
completeness of significant management assumptions and management’s
acceptance of its responsibility for the prospective financial information.
The management is also responsible for identification and disclosure of
uncontrollable factors, outstanding litigations, commitments, or any other material
factors that are likely to affect the prospective financial information.
Presentation and Disclosure
26. When assessing the presentation and disclosure of the prospective
financial information and the underlying assumptions, in addition to the specific
requirements of any relevant statutes, regulations as well as the relevant
professional pronouncements, the auditor will need to consider whether:
(a) the presentation of prospective financial information is informative and not
misleading;
(b) the accounting policies are clearly disclosed in the notes to the prospective
financial information;
(c) the assumptions are adequately disclosed in the notes to the prospective
financial information. It needs to be clear whether assumptions represent
management’s best-estimates or are hypothetical and, when assumptions
are made in areas that are material and are subject to a high degree of
uncertainty, this uncertainty and the resulting sensitivity of results needs to
be adequately disclosed;
(d) the date as of which the prospective financial information was prepared is
disclosed. Management needs to confirm that the assumptions are
appropriate as of this date, even though the underlying information may
have been accumulated over a period of time;
(e) the basis of establishing points in a range is clearly indicated and the range
is not selected in a biased or misleading manner when results shown in the
prospective financial information are expressed in terms of a range; and
(f) there is any change in the accounting policy of the entity from that
disclosed in the most recent historical financial statements and whether
reason for the change and the effect of such change on the prospective
financial information has been adequately disclosed.
Documentation
27. The auditor should document matters, which are important in
providing evidence to support his report on examination of prospective
financial information, and evidence that such examination was carried out
in accordance with this SAE. The working papers will include the sources
SAE 3400 208
of information, basis of forecasts and the assumptions made in arriving the
forecasts, hypothetical assumptions, evidence supporting the
assumptions, management representations regarding the intended use and
distribution of the information, completeness of material assumptions,
management’s acceptance of its responsibility for the information, audit
plan, the nature, timing and extent of examination procedures performed,
and, in case the auditor expresses a modified opinion or withdraws from
the engagement, the reasons forming the basis of such decision.
Report on Examination of Prospective Financial
Information
28. The report by an auditor on an examination of prospective financial
information should contain the following:
(a) Title;
(b) Addressee;
(c) Identification of the prospective financial information;
(d) Reference to the Standards on Auditing applicable to the examination
of prospective financial information;
(e) Statement that management is responsible for the prospective
financial information including the underlying assumptions;
(f) When applicable, a reference to the purpose and/or restricted
distribution of the prospective financial information;
(g) Statement that the examination procedures included examination, on
a test basis, of evidence supporting the assumptions, amounts and
other disclosures in the forecast or projection;
(h) Statement of negative assurance as to whether the assumptions
provide a reasonable basis for the prospective financial information;
(i) Opinion as to whether the prospective financial information is
properly prepared on the basis of the assumptions and is presented in
accordance with the relevant financial reporting framework;
(j) Appropriate caveats concerning the achievability of the results
indicated by the prospective financial information;
(k) Date of report (which should be the date procedures have been
completed);
(l) Place of signature; and
(m) Signature.
29. Such a report would:
State whether, based on the examination of the evidence supporting the
assumptions, anything has come to the auditor’s attention, which causes the
auditor to believe that the assumptions do not provide a reasonable basis for
the prospective financial information.
Express an opinion as to whether the prospective financial information is
properly prepared on the basis of the assumptions and is presented in
accordance with the relevant financial reporting framework.
State that:
Actual results are likely to be different from the prospective financial
information since anticipated events frequently do not occur as
expected and the variation could be material. Likewise, when the
prospective financial information is expressed as a range, it would be
stated that there can be no assurance that actual results will fall within
the range; and
In the case of a projection, the prospective financial information has
been prepared for (intended use), using a set of assumptions that
include hypothetical assumptions about future events and
management’s actions that are not necessarily expected to occur.
Consequently, readers are cautioned that the prospective financial
information should not be used for purposes other than the
abovementioned intended use.
30. The following is an example of an extract from an unmodified report on a
projection:
We have examined the projection of _____________ (project)__________
(name of the entity) for the period from _______ to ______ as given in4
____ to the Prospective Financial Information from page __to ___in
accordance with Standard on Assurance Engagement 3400, “The
Examination of Prospective Financial Information”, issued by the Institute of
Chartered Accountants of India. The preparation and presentation of the
projection including the underlying assumptions, set out in note ____ to
______ to the prospective financial information, is the responsibility of the
Management and has been approved by the Board of Directors5 of the
company. Our responsibility is to examine the evidence supporting the
assumptions (excluding the hypothetical assumption) and other information
in the prospective financial information. Our responsibility does not include
verification of the accuracy of the projections. Therefore, we do not vouch
for the accuracy of the same.
4 Provide suitable identification, such as by reference to page numbers or by identifying the
individual schedule.
5 Other corresponding approving authority in the case of entities other than companies.
SAE 3400 210
This projection has been prepared for (describe purpose). As the entity is in
a start-up phase the projection has been prepared using a set of
assumptions that include hypothetical assumptions about future events and
management’s actions that are not necessarily expected to occur.
Consequently, readers are cautioned that this projection may not be
appropriate for purposes other than that described above.
We have carried out our examination of the prospective financial
information on a test basis. Based on our examination of the evidence
supporting the assumptions, nothing has come to our attention which
causes us to believe that these assumptions do not provide a reasonable
basis for the projection, assuming that ________________ (state or refer to
the hypothetical assumptions).
Further, in our opinion the projection is properly prepared on the basis of
the assumptions as set out in Note _____ to the Prospective Financial
Information and on a consistent basis in accordance with the historical
financial statements, using appropriate accounting principles. Even if the
events anticipated under the hypothetical assumptions described above
occur, actual results are still likely to be different from the projection since
other anticipated events frequently do not occur as expected and the
variation may be material.
A complete illustrative format of an unmodified report on a projection is given in
Appendix 1.
31. The following is an example of an extract from an unmodified report on a
forecast:
We have examined the forecast of ____________________ (project) of the
______________________ (name of the entity) for the period from
___________ to ___________ in accordance with the Standard on
Assurance Engagements (SAE) 3400, “The Examination of Prospective
Financial Information”, issued by the Institute of Chartered Accountants of
India. The preparation and presentation of the forecast including the
underlying assumptions, set out in Note _____ to the Prospective Financial
Information is the responsibility of the management and has been approved
by the Board of Directors of the Company. The sources of information are
set out in Annexure ______ to the prospective financial information. Our
responsibility is to examine the evidence supporting the forecast. Our
responsibility does not include verification of the accuracy of the forecasts.
Therefore, we do not vouch for the accuracy of the same.
Based on our examination of the evidence supporting the
assumptions, nothing has come to our attention which causes us to
believe that these assumptions do not provide a reasonable basis for
the forecast. Further, in our opinion the forecast is properly prepared
on the basis of the assumptions as set out in Note ____ and on
consistent basis with historical financial statements, using
appropriate accounting principles.
Actual results are likely to be different from the forecast since anticipated
events frequently do not occur as expected and the variation may be
material.
A complete illustrative format of an unmodified report on a forecast is given in
Appendix 2.
32. When the auditor believes that the presentation and disclosure of the
prospective financial information is not adequate, the auditor should
express a qualified or adverse opinion in the report on the prospective
financial information, or withdraw from the engagement as appropriate. An
example would be where financial information fails to disclose adequately the
consequences of any assumptions, which are highly sensitive.
33. When the auditor believes that one or more significant assumptions
do not provide a reasonable basis for the prospective financial information
prepared on the basis of best-estimate assumptions or that one or more
significant assumptions do not provide a reasonable basis for the
prospective financial information given the hypothetical assumptions, the
auditor should either express an adverse opinion setting out the reasons in
the report on the prospective financial information, or withdraw from the
engagement.
34. When the examination is affected by conditions that preclude
application of one or more procedures considered necessary in the
circumstances, the auditor should either withdraw from the engagement or
disclaim the opinion and describe the scope limitation in the report on the
prospective financial information.
Effective Date
35. This SAE is effective in relation to reports on projections/forecasts, issued
on or after April 1, 2007. However, earlier application of the Standard is
encouraged.
Compatibility with International Standard on Assurance
Engagement (ISAE) 3400
Except for the matters noted below, the basic principles and essential
procedures of this SAE and International Standard on Assurance Engagement
SAE 3400 212
(ISAE) 3400 “The Examination of Prospective Financial Information”, are
consistent in all material respects:
(a) SAE precludes the auditor from expressing positive assurance regarding
the assumptions as it may tantamount to vouching for the accuracy of the
forecast/projection/hypothetical assumptions. Whereas, the ISAE 3400
permits the auditor to express positive assurance when in his judgment an
appropriate level of satisfaction has been obtained.
(b) The sub points in paragraph 17 (corresponding to paragraph 17 of the ISAE
3400) have been rearranged. Sub point (e) has been elucidated for the
sake of better understanding of the readers. The sub points (f) and (g)
have been added in the SAE as additional factors to be considered by the
auditor.
(c) In paragraph 20 of the SAE, the phrase “although evidence supporting
hypothetical assumptions need not be obtained” has been deleted since it
is felt that such a phrase is inconsistent with the necessity for the auditor to
obtain evidence to support his conclusions.
(d) In paragraph 26 (corresponding to paragraph 26 of the ISAE 3400), the
term “professional standards” has been changed to “professional
pronouncements” since pronouncements would include standards as well
as other relevant documents, such as Guidance Notes, announcement(s),
issued by the ICAI.
(e) In line with requirement of SA 700(Revised), “Forming an Opinion and
Reporting on Financial Statements” this SAE requires the auditor to include
a scope section in the examination report to explain the nature and extent
of the auditor’s work. ISAE 3400 does not contain an equivalent
requirement.
(f) SAE specifically provides for the documentation required to be done by the
auditor in regard to any engagement of examination of prospective financial
information. However, ISAE 3400 does not contain such explicit provision.
Appendix 1
Illustrative Format of an Unmodified Report on a Projection
Report on Examination of Prospective Financial Information
To the …(addressee)………….
We have examined the projection of _____________ (project)__________
(name of the entity) for the period from _______ to ______ as given in6 ____ to
the Prospective Financial Information from page __to ___in accordance with
Standard on Assurance Engagement 3400, “The Examination of Prospective
Financial Information”, issued by the Institute of Chartered Accountants of India.
The preparation and presentation of the projection including the underlying
assumptions, set out in note ____ to ______ to the prospective financial
information, is the responsibility of the Management and has been approved by
the Board of Directors7 of the company. Our responsibility is to examine the
evidence supporting the assumptions (excluding the hypothetical assumption)
and other information in the prospective financial information. Our responsibility
does not include verification of projections. Therefore, we do not vouch for the
accuracy of the same.
This projection has been prepared for _________________ (intended use). The
projection has been prepared using a set of assumptions that include
hypothetical assumptions about future events and management’s actions that
are not necessarily expected to occur. Consequently, users are cautioned that
this projection may not be appropriate for purposes other than that described
above.
We have carried out our examination of the prospective financial information on a
test basis. Based on our examination of the evidence supporting the
assumptions, nothing has come to our attention which causes us to believe that
these assumptions do not provide a reasonable basis for the projection,
assuming that ________________ (state or refer to the hypothetical
assumptions).
Further, in our opinion the projection is properly prepared on the basis of the
assumptions as set out in Note _____ to the Prospective Financial Information
and on a consistent basis with the historical financial statements, using
appropriate accounting principles. Even if the events anticipated under the
hypothetical assumptions described above occur, actual results are still likely to
6 Provide suitable identification, such as by reference to page numbers or by identifying the
individual schedule.
7 Other corresponding approving authority in the case of entities other than companies.
SAE 3400 214
be different from the projection since other anticipated events frequently do not
occur as expected and the variation may be material.
For ABC & Co.,
Chartered Accountants
Signature
(Name of the member signing the report)
(Designation)8
Membership Number
Date
Place of Signature
8 Partner or proprietor, as the case may be.
Appendix 2
Illustrative Format of an Unmodified Report on a Forecast
Report on Examination of Prospective Financial Information
To the ……(addressee)……….
We have examined the forecast of _________(project)___________of the
__________ (name of the entity) for the period from ___ to ___ as given9 in ____
to ____ of the prospective financial information in accordance with Standard on
Assurance Engagement __, The Examination of Prospective Financial
Information, issued by the Institute of Chartered Accountants of India. The
preparation and presentation of the forecast including the underlying
assumptions, set out in Note _____ to the Prospective Financial Information, is
the responsibility of the management and has been approved by the Board of
Directors of the company10. The sources of information are set out in Annexure
____ to the prospective financial information. Our responsibility is to examine the
evidence supporting the forecast. Our responsibility does not include verification
of the forecasts. Therefore, we do not vouch for the accuracy of the same.
This forecast has been prepared for _________________ (intended use). The
forecast has been prepared using a set of assumptions as set out in Note ____
to the prospective financial information.
We have carried out our examination of the prospective financial information on a
test basis.
Based on our examination of the evidence supporting the assumptions, nothing
has come to our attention, which causes us to believe that assumptions do not
provide a reasonable basis for the forecast. Further, in our opinion the forecast,
read with the notes thereon, is properly prepared on the basis of the assumptions
as set out in Note ______ and on a consistent basis with the historical financial
statements, using appropriate accounting principles.
Actual results are likely to be different from the forecast since anticipated events
might not occur as expected and the variation might be material.
For ABC & Co.,
Chartered Accountants
9 Provide suitable identification, such as by reference to page numbers or by identifying the
individual schedule.
10 Other corresponding approving authority in the case of entities other than companies.
SAE 3400 216
Signature
(Name of the member signing the report)
(Designation)11
Membership Number
Place of Signature:
Date:
11 Partner or proprietor, as the case may be.