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CA Ravi Taori
(CNO 3400.100) Presentation and Disclosure
When evaluating the presentation and disclosure of prospective financial information and its underlying
assumptions, along with adhering to specific statutes, regulations, and professional guidelines, the following
factors should be taken into account:
(Shortcut: DHARNA)
Date:
• Highlight the date on which the prospective financial information was formulated. It's vital for management
to affirm the appropriateness of the assumptions based on this date, despite the possibility of data accumulation
over an extended duration.
Historical Statement Accounting Policy Changes:
• If there's a shift in the accounting strategy from what was previously disclosed in the entity's latest historical
statements, the motive behind this change and its implications for the prospective data should be explicitly
outlined.
Accounting Policies Disclosure:
• Ensure that the accounting policies employed are clearly revealed in the notes accompanying the prospective
financial information.
Basis for Range:
• When presenting prospective data in a range format, delineate the methodology used to derive those points,
ensuring the range is impartial and not misleading.
Not misleading:
• The presentation of prospective financial information is informative and not misleading
Assumptions disclosure:
• Confirm that assumptions are suitably detailed in the notes. It should be evident if they represent
management's best-estimates or are hypothetical. In scenarios where assumptions pertain to material areas with
high uncertainty, both the uncertainty and the potential impact on outcomes should be sufficiently addressed.
(CNO 3400.120) Report on Examination of Prospective Financial Information
• The report crafted for evaluating prospective financial information should encompass:
Title:
• Title
Addressee:
• Addressee
Identification:
• Identification of the prospective financial information
Purpose/Distribution:
• Where relevant, a mention regarding the intention or potential restricted distribution of the prospective
financial information.
Management's Responsibilities:
• Assertion indicating management's accountability for both the prospective financial information and the
assumptions it's based on
Next 2 Points are like Auditor’s Responsibility
Reference to Standards:
• Reference to the Standards on Auditing pertinent to the examination of prospective financial information
Examination Procedures:
• 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
Negative Assurance on assumptions:
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