Page 221 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Purpose: The purpose of pro forma financial information included in a prospectus is solely to illustrate the
impact of a significant event or transaction on unadjusted financial information of the entity as if the event had
occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration.
Not actual Financial Position or performance: Pro forma financial information does not represent the entity’s
actual financial position, financial performance, or cash flows.
Objectives in Accordance with SA 3420
The objectives of the practitioner in accordance with SA 3420 are: -
As per applicable criteria: To obtain reasonable assurance about whether the pro forma financial information
has been compiled, in all material respects, by the responsible party on the basis of the applicable criteria and
Reporting: To report in accordance with the practitioner’s findings.

(CNO 3420.040) Compilation of Pro forma financial information.
The compilation of pro forma financial information involves the responsible party gathering, classifying,
summarising and presenting financial information that illustrates the impact of a significant event or transaction
on the unadjusted financial information of the entity as if the event had occurred or the transaction had been
undertaken at the selected date.
Steps involved in this process include: -
Identifying Source of Unadjusted Information: Identifying the source of the unadjusted financial information
to be used in compiling the pro forma financial information and extracting the unadjusted financial information
from that source.
Making Pro Forma Adjustments: Making pro forma adjustments to the unadjusted financial information for
the purpose for which the pro forma financial information is presented and
Presenting Resulting Pro Forma Information: Presenting the resulting pro forma financial information with
accompanying disclosures.

(CNO 3420.060) Nature of the Practitioner’s Responsibility.
No responsibility to compile: In such an engagement performed under this SAE, the practitioner has no
responsibility to compile the pro forma financial information for the entity. Such responsibility rests with the
responsible party.
Responsibility to Report on Compilation: The practitioner’s sole responsibility is to report on whether the
pro forma financial information has been compiled, in all material respects, by the responsible party on the basis
of the applicable criteria.
Report on Presentation of Significant Effects Directly Attributable: It is a reasonable assurance engagement
to report on the compilation of pro forma financial information involving performing the procedures to assess
whether the applicable criteria used by the responsible party in the compilation of the pro forma financial
information provide a reasonable basis for presenting the significant effects directly attributable to the event or
transaction.

(CNO 3420.080) Steps involved in such an Engagement.
Engagement acceptance
Planning and performing the engagement.
Written Representations
Forming the opinion
Preparing the assurance report

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