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Audit - Gleim

Terms in this set (61)

Preparing the income statement and balance sheet for one year in the future based on client expectations and predictions.

Answer C is correct.
Statements on Standards for Attestation Engagements (SSAEs) apply generally to performance of an examination, review, or agreed-upon procedures engagement to report on subject matter, or an assertion about it, that is the responsibility of another party. Accordingly, the SSAEs apply to engagements to assemble or report on prospective financial statements (PFSs) that reasonably might be expected to be used by third parties. PFSs present expected financial position, results of operations, and cash flows. They include forecasts and projections. A forecast is based on the responsible party's assumptions reflecting the conditions it expects to exist and the course of action it expects to take. Furthermore, a review is not permitted to be performed with regard to a forecast or projection. However, a practitioner may compile, examine, or apply agreed-upon procedures to a partial presentation, that is, a presentation of prospective financial information that omits one or more items required by the minimum presentation guidelines for PFSs. Failure to present significant cash flows is such an omission, although a statement of cash flows is not required. Thus, preparing the income statement and balance sheet for one year in the future based on client expectations and predictions is an attestation engagement to assemble a partial presentation of a forecast. The presentation is not partial if the omitted information may be derived from the presentation (AT 101 and AT 301).