An examination of a financial forecast is a professional service that involves
A) Compiling or assembling a financial forecast that is based on management's assumptions.
B) Limiting the distribution of the accountant's report to management and the board of directors.
C) Assuming responsibility to update management on key events for one year after the report's date.
D) Evaluating the preparation of a financial forecast and the support underlying management's assumptions.

Question

Quizplus · Accepted Answer

The examination of a financial forecast involves evaluating both the preparation of the forecast and the support for management's assumptions. This goes beyond simply compiling or assembling a forecast and requires an assessment of the reasonableness and reliability of the assumptions. The report is not limited to management and the board of directors, and there is no requirement to assume responsibility for updating management on key events after the report's date. Ultimately, the purpose of a financial forecast examination is to provide assurance to external parties that the forecast is reliable and can be trusted for decision-making purposes.

An Examination of a Financial Forecast Is a Professional Service