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

Accepting an engagement to examine an entity's financial projections would be appropriate if the distribution of projections were limited to a bank with which the entity is negotiating for a loan. This is because financial projections are often required by banks when making decisions on whether to issue loans to the entity. The other options, such as distribution to the general public, potential stockholders or all stockholders, do not necessarily correspond to a need for a financial projection examination.

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