Acca aaa s21 Notes

factual findings - no 
assurance
is expressed. Forensic audits (see Chapter 28) include agreed-upon procedures. Due 
diligence assignments may also be of this nature (see Chapter 29).
3.2. Compilation engagements
Where the accountant assists management with the preparation and presentation of financial 
information. The practitioner does 
not
gather any evidence (eg to verify the accuracy or 
completeness of the information) and therefore 
no
opinion is expressed.
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Chapter 27
PROSPECTIVE FINANCIAL INFORMATION
1. Introduction
For example, the auditor (or other firm of accountants) has been asked to report on:
๏
A capital expenditure budget
๏
A profit forecast
๏
A cash flow budget
Often, the report is requested by a potential supplier of capital, such as a bank beginning or renewing 
a loan agreement, or by a venture capitalist considering the supply of equity finance.
Prospective financial information ('PFI') is financial information based on assumptions about events 
and possible actions that may occur (ie in the 
future
). PFI can be:
๏
A forecast: based on what is 
expected
to happen. Uses 'best-estimate' assumptions (ie most 
likely outcomes) and is usually for not more than a year. 
๏
A projection: includes 
hypothetical
assumptions about events and actions that are not 
necessarily expected to take place (eg for a business start-up). It may illustrate the possible 
outcomes of 'what-if' scenarios.
๏
A combination (eg a one-year forecast and a five-year projection).
The distinction is important as projections have greater uncertainty and less supporting evidence 
than forecasts.