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

Sagar Logistics Ltd's management gives CA Dutta a five-year cash flow forecast for a loan application, and also states that the forecast is meant only for the lender. CA Dutta completes the examination procedures on 12 March, while the report is signed on 20 March after the lender's meeting was rescheduled. In the SAE 3400 report, which is correct?

The report should be dated 12 March, being the date the examination procedures were completed, not the signing date. Because the forecast is for the lender only, the report should also refer to its purpose and restricted distribution where applicable.

  1. ADate the report 20 March because that is the date of signing, and omit any reference to restricted distribution
  2. BDate the report 12 March, the date procedures were completed, and refer to the purpose and restricted distribution where applicableCorrect
  3. CDate the report with the lender's meeting date, and include a positive assurance on the assumptions
  4. DLeave the report undated, because forecasts relate to future periods

Explanation

SAE 3400 says the date of the report should be the date procedures have been completed, here 12 March. The report also refers, when applicable, to the purpose and restricted distribution of the information, which applies as the forecast is meant only for the lender. Dating it 20 March would be wrong.

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