Prospective Financial Information Flashcards
What is perspective financial information
Often a report as requested by a potential supplier of capital such as a bank beginning or renewing a loan agreement or buy a venture capitalist considering the supply of equity finance.
It is financial information based on assumptions about events and possible actions that may occur in the future and can be:
Forecast (expected)
Projection (hypothetical)
Combination
What Assurance can be given for perspective financial information
It should be obvious that it is not possible to express positive insurance as the future is simply too uncertain.
The best that the accountant can provide is negative (limited) assurance. The simply states that there is nothing suggests that the assumptions are unreasonable and they have been properly prepared based on those assumptions
