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CA Ravi Taori
Scope of SAE-3400 (What to check & how to check)
Inclusion:
• This Standard on Assurance Engagement (SAE) aims to establish standards and offer guidance on examining
and reporting on prospective financial information, covering best-estimate and hypothetical assumptions.
Exclusion:
• This SAE doesn’t cover the examination of prospective financial information presented in general or
narrative terms, like management’s discussion in an annual report, though many outlined procedures may still
be relevant.
Relation with Other Standards:
• Principles from other Standards on Auditing by the Institute of Chartered Accountants of India should be
utilized, where practical, when applying this SAE.
Usage of "Auditor":
• The term “auditor” is used in this SAE to describe services tied to examining prospective financial information.
However, this doesn’t mean the individual offering these services must be the entity’s statutory auditor.
Nature of Assurance Regarding Prospective Financial Information
Prospective Nature:
• Prospective financial information pertains to events and actions that have yet to occur and might never
transpire.
Evidence:
Assumption-Based:
• While there may be evidence supporting the assumptions underpinning the prospective financial information,
such evidence tends to be future-oriented and speculative.
Contrast with Historical Information:
• This differs from the evidence usually found when examining historical financial information.
Limitation on Expressing Opinion:
• Given the nature of the evidence, it's not possible to express an opinion about whether the results indicated in
the prospective financial information will indeed materialize.

(CNO 3400.040) Responsibility of Preparation and Presentation of Prospective Financial Information
Management is responsible for the preparation and presentation of the prospective financial information
including the:
Identification and disclosure of Prospective Financial Information.
Explaining the basis of forecast.
Underlying assumptions.
Can Professional Accountants be associated with Prospective Financial Information?
Refer Chapter 19(CNO-PE.1500) CLAUSE 3
Duties of Member who is Examining the Prospective Financial Information
1. Management’s Assumptions: In an engagement to examine prospective financial information, the auditor
should obtain sufficient appropriate evidence as to whether 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.
2. Consistency with Historical Statements: The auditor should verify that the prospective financial
information is prepared on a consistent basis with historical financial statements, using appropriate accounting
principles.
3. Proper Preparation Based on Assumptions: The auditor should ensure that the prospective financial
information is properly prepared on the basis of the assumptions.

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