ISAE 3400 – NBC Institute

AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

Question

Allhope Publications Limited is an old established publishing company owned by two brothers. Over the years, the company had made consistent progress both in sales and profitability.

Due to the quality of their work, the patronage of the company has grown to the extent that its working capital cannot accommodate the work on hand.

The Directors have approached their bankers, Owopo Bank Plc for a facility of N500m to procure essentially modern machinery and printing materials and also for running expenses, particularly salaries.

In support of its application for the bank facility, the company has prepared a profit forecast which is being presented to your firm for review.

Required:

As contained in ISAE 3400: “The Examination of Prospective Financial Information (PFI)”:

a. What will you take into consideration before accepting this assurance engagement? (5 Marks)
b. Enumerate the procedures to be adopted after you have agreed to take up the engagement:
i. As regards PFI assurance engagements generally.
ii. On the Profit forecast. (10 Marks)

Answer

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Tags: Assurance Engagement, ISAE 3400, Profit Forecast, Prospective financial information, Review Procedures, Risk Assessment
Level: Level 3

Topic: Audit of Prospective Financial Information

AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

Question

Eebuks Ltd is a retailer of academic textbooks that sells through its own network of bookshops and online through its website. The revenue from the website includes both cash sales and sales on credit to educational institutions. The company has provided historical analysis from its trade receivables ledger indicating that for sales made on credit, 25% payment is received in the month of sale, 70% after 30 days, and the remainder are irrecoverable debts.

You are a Manager in Makafui & Associates, a firm of Chartered Accountants offering a range of services from audit to non-audit for its clients. On 1 July 2023, your firm was asked by Eebuks Ltd, a company that is not an audit client of your firm, to consider a potential engagement to review and provide an assurance report on Prospective Financial Information. Makafui & Associates has already conducted specific client identification procedures in line with money laundering regulations with satisfactory results.

Additionally, Eebuks Ltd has approached your firm to obtain an independent assurance opinion on its cash flow forecast, which is being prepared for its bankers in support of an application for an increase in its existing overdraft facility.

Required:

a) In line with ISAE 3400: The Examination of Prospective Financial Information, discuss FIVE (5) matters to be considered by Makafui & Associates before accepting the engagement to review and report on Eebuks Ltd’s Prospective Financial Information. (10 marks)

b) Assuming Makafui & Associates accepts the engagement, recommend EIGHT (8) procedures to be performed in respect of Eebuks Ltd’s cash flow forecast. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assurance Services, Audit Procedures, Cash Flow Forecast, ISAE 3400, Prospective financial information, Review Engagement
Level: Level 3

Topic: Assurance services, Planning, The audit approach
Series: JULY 2023

AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

Question

Allhope Publications Limited is an old established publishing company owned by two brothers. Over the years, the company had made consistent progress both in sales and profitability.

Due to the quality of their work, the patronage of the company has grown to the extent that its working capital cannot accommodate the work on hand.

In support of its application for the bank facility, the company has prepared a profit forecast which is being presented to your firm for review.

Required:

As contained in ISAE 3400: “The Examination of Prospective Financial Information (PFI)”:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assurance Engagement, ISAE 3400, Profit Forecast, Prospective financial information, Review Procedures, Risk Assessment
Level: Level 3

Topic: Audit of Prospective Financial Information

AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

Question

Required:

b) Assuming Makafui & Associates accepts the engagement, recommend EIGHT (8) procedures to be performed in respect of Eebuks Ltd’s cash flow forecast. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assurance Services, Audit Procedures, Cash Flow Forecast, ISAE 3400, Prospective financial information, Review Engagement
Level: Level 3

Topic: Assurance services, Planning, The audit approach
Series: JULY 2023

Question Tag: ISAE 3400

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AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

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AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

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AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

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AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information

Evaluate considerations before accepting PFI engagements and procedures for reviewing profit forecasts under ISAE 3400.

You're reporting an error for "AAA – Nov 2016 – L3 – Q6 – Audit of Prospective Financial Information"

AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning

Discuss matters to consider before accepting a review engagement and recommend procedures for examining a cash flow forecast.

You're reporting an error for "AAA – July 2023 – L3 – Q2 – Assurance services | The audit approach | Planning"

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