Forecasts and Projections We help clients plan operations, obtain financing for expansion, minimize future years' taxes, and lend assistance in other areas related to planning and accounting for future events. To effectively render such services, we often help clients develop future-oriented, or prospective, financial information.
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Investors realize historical financial statements do not fulfill all of their information needs. They want information about what is likely to happen in the future in addition to information about what has happened in the past. Investors realize no one can predict the future with certainty, but they believe that access to prospective financial information helps them make better decisions. Thus, the objective of developing prospective financial information is not to predict the future, but to provide information to improve the decision-making process.
There are two broad categories of prospective financial statement engagements—internal use and third-party use. Within those broad categories, we provide various levels of service. The types of services are as follows:
Examination
Examination engagements generally involve: (a) evaluating the preparation, the support underlying the assumptions, and the presentation of the prospective financial statements for conformity with AICPA presentation guidelines and (b) issuing an examination report. The examination report expresses a positive opinion on whether the assumptions provide a reasonable basis for the prospective financial statements and whether the prospective statements conform with AICPA presentation guidelines.
Compilation
Compilation engagements are the lowest level of service we provide on prospective financial statements intended for third-party use. A compilation engagement involves: (a) assembling the prospective financial statements to the extent necessary, (b) reading the prospective financial statements for conformity with AICPA presentation guidelines and for consideration of whether they appear to be obviously not inappropriate, and (c) issuing a compilation report. A compilation report disclaims an opinion or any assurance on the prospective financial statements and their assumptions.
Assembly
In an assembly engagement, we do not provide any type of assurance. We merely perform mathematical calculations to convert your assumptions into prospective amounts. We may or may not issue a report.
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