Accepting an engagement to examine an entity's financial projections would most likely be appropriate if distribution of the projections were limited to:
A)the general public on the entity's website.
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

The engagement to examine an entity's financial projections would be appropriate if distribution of the projections were limited to a bank with which the entity is negotiating for a loan. This is because the bank would need assurance that the entity's financial projections are reliable and can be used as a basis for lending decisions. It is important to note that accepting an engagement to examine an entity's financial projections for distribution to potential stockholders or the general public is not appropriate as it would not provide any assurance on the reliability of the projections.

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