![]() A financial projection is sometimes prepared to present one or more hypothetical courses of action for evaluation, as in response to a question such as, "What would happen if… ?“ A financial projection is based on the responsible party's assumptions reflecting conditions it expects would exist and the course of action it expects would be taken, given one or more hypothetical assumptions. When a forecast contains a range, the range is not selected in a biased or misleading manner, for example, a range in which one end is significantly less expected than the other.įinancial projection: Prospective financial statements that present, to the best of the responsible party's knowledge and belief, given one or more hypothetical assumptions, an entity's expected financial position, results of operations and cash flows. ![]() ![]() A financial forecast may be expressed in specific monetary amounts as a single point estimate of forecasted results or as a range, where the responsible party selects key assumptions to form a range within which it reasonably expects, to the best of its knowledge and belief, the item or items subject to the assumptions to actually fall. A financial forecast is based on the responsible party's assumptions reflecting the conditions it expects to exist and the course of action it expects to take. Pro forma financial statements and partial presentations are not considered to be prospective financial statements.įinancial forecast: Prospective financial statements that present, to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations and cash flows. Although prospective financial statements may cover a period that has partially expired, statements for periods that have completely expired are not considered to be prospective financial statements. Prospective financial statements: Either financial forecasts or financial projections including the summaries of significant assumptions and accounting policies. We begin with some definitions from an American Institute of Certified Public Accountants (AICPA) practice aid (now AT Section 301) that originally was targeted at professionals who were examining, compiling or applying agreed-upon procedures to prospective financial statements prepared by other parties (usually a client) but generically referred to as a “responsible party:”
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