Accepting an engagement to examine an entity's financial projections most likely would be appropriate if the projections were to be distributed to:
A)All employees who work for the entity.
B)Potential stockholders who request a prospectus or a registration statement.
C)A bank with which the entity is negotiating for a loan.
D)All stockholders of record as of the report date.

Question

Quizplus · Accepted Answer

Accepting an engagement to examine financial projections would generally only be appropriate if the projections were to be distributed to a third party such as a bank, potential lender, or investor. In this case, choice C is the most logical option as the projections are being distributed to a bank with which the entity is negotiating for a loan. Choices A and D are not appropriate as they imply that the projections are being distributed broadly to employees or all stockholders, which is not a typical scenario for an engagement to examine financial projections. Choice B is a possible option, but it is not as likely as choice C in the given scenario.

Accepting an Engagement to Examine an Entity's Financial Projections Most