Forecasts and Projections
An auditor may be engaged to provide a report on forecasts and projections prepared by a business. The engagement may be regulated, for example, in connection with a securities offering to a regulated market, or it may be contractual such as reporting to a bank or provider of finance.
The auditor is reporting on the credibility of future financial forecasts and projections. In assessing the credibility of this information the auditor will consider matters as the basis of preparation of the information, the quality of the assumptions used in preparing the information, how the forecasts compare such with external economic forecasts and how the forecasts compare with the historical performance of the business.