Prospective financial information - level of assurance and reporting

In this lesson

1. 0:00 Understanding limited assurance on forecasts
2. 0:42 Structure of an assurance report
3. 1:51 Conclusion wording and negative assurance
4. 2:43 Caveats and limitations of forecasts

About this lesson

You'll explore the type of assurance you can provide on forecasts (limited assurance due to lack of historical evidence), the essential components of an assurance report, and how to express your conclusion using negative assurance language. This covers the reporting requirements for AA (Audit and Assurance) engagements involving forecasts or projections. The assurance report must include specific elements: a clear title identifying the subject matter, a statement confirming management's responsibility for preparing the prospective information, your role in forming a conclusion, any restrictions on distribution, and appropriate dating and signature. The conclusion itself follows a precise structure: you'll express negative assurance that the assumptions provide a reasonable basis for the forecast, confirm the forecast is properly prepared in accordance with applicable accounting frameworks like IFRS, and crucially, include a caveat that actual results are likely to differ materially from the forecast since anticipated events frequently don't occur as expected. Understanding this framework ensures your reports meet professional standards and clearly communicate both what you've reviewed and the inherent limitations of forecasting. This is essential for passing AA assessments and delivering credible assurance work in practice.

Duration: 3m