Skip to content

CA Final · Advanced Auditing, Assurance and Professional Ethics · Prospective Financial Information and Other Assurance Services

CA Rohan is engaged to report on a projection prepared by Kaveri Foods Ltd for submission to a bank. Management says the report should omit any mention of management's responsibility, as the bank only wants the numbers. Under SAE 3400, which element must the auditor's report still contain?

The report must state that management is responsible for the prospective financial information, including the underlying assumptions. This is a required element of the SAE 3400 report. The auditor does not take over that responsibility and cannot give positive assurance or guarantee that the results will be achieved.

  1. AA statement that the auditor is responsible for the underlying assumptions
  2. BA statement that management is responsible for the prospective financial information including the underlying assumptionsCorrect
  3. CA positive assurance that the assumptions are free of material misstatement
  4. DA guarantee that the projected results will be achieved

Explanation

SAE 3400 requires the report to state that management is responsible for the prospective financial information including its underlying assumptions. Option A reverses responsibility. Options C and D claim assurance the auditor cannot give, since only moderate assurance on assumptions is possible.

Did you get it right without looking?

One question tells you little. A timed set on Prospective Financial Information and Other Assurance Services shows your real accuracy, how long you take and where you lose marks.

Practise Prospective Financial Information and Other Assurance ServicesFree diagnostic mock

More Prospective Financial Information and Other Assurance Services questions