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

option D best describes an examination of a financial forecast, as it involves evaluating the preparation of the forecast and reviewing the support for management's assumptions. The accountant is responsible for providing an opinion on the reasonableness of the forecast and any underlying assumptions, and is required to issue a report to be used by third parties. Option A is more appropriate for a preparation of a financial forecast service. Option B is not applicable, as the accountant's report must be distributed to third parties. Option C is not necessarily required, but the accountant may agree to provide updates as part of the engagement.

An Examination of a Financial Forecast Is a Professional Service