Question

Which of the following characteristics of prospective financial statements would require the practitioner to include in a report on the prospective financial statements an alert that restricts the use and distribution of the report?
a) They are considered a financial projection.
b) They are considered a financial forecast.
c) They contain a range of forecasted results.
d) They are prepared by a practitioner who lacks independence.

Answer 1

Answer:

In this case,the answer would be option b) or They are considered as financial forecast.

Explanation:

• Any prospective financial statements is a highly important and confidential document for any legitimate business organization  and should be prevented from being disclosed, especially to any external sources.
• Therefore, it s treated or considered as only a general financial document especially when dealing with any party or individual with whom the concerned company or organization is not directly dealing with.
• Hence, only an official financial reporting containing an overall financial forecast is sufficient for general use of the report with any related or unrelated party or individual.