Statements of Position



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This proposed guide provides guidance for management and other responsible parties regarding the preparation and presentation of prospective financial statements. Prospective financial statements are financial information about the future that impart certain minimum details about the results of operations and changes in financial position. The draft also provides guidance for accountants, WHETHER ENGAGED IN ACCOUNTING, AUDITING, TAX, OR MAS PRACTICES, and would require accountants associated with prospective financial statements to report on them. Accountants may be associated with prospective financial statements as a result of engagements conducted for the express purpose of compiling or reviewing such statements or in conjunction with assisting their clients in other ways, for example, in obtaining financing, deciding whether to lease or buy an asset, consummating a merger or acquisition, determining the tax consequences of future actions, or planning future operations. Specifically, the proposed guide would: 1. Expand the guidance on preparation and presentation of financial forecasts contained in MAS Guideline No. 3, Guidelines for Systems for the Preparation of Financial Forecasts, and SOP 75-4, Presentation and Disclosure of Financial Forecasts, to encompass financial projections and multiple projections, as well as financial forecasts. The guidance on a financial forecast in those documents would generally continue to apply. One change, however, would be to use the phrase "to the best of the responsible party's knowledge and belief, an entity's expected financial position. . ." in the definition of a financial forecast rather than the phrase used in the definition in SOP 75-4, "an estimate of the most probable financial position. . . ." This change would be made to make clear that a forecast should be management's best estimate of future results without implying an unrealistically precise standard (section 200). 2. Explain what types of prospective financial statements are appropriate for different circumstances (section 210). 3. Require the accountant who becomes associated with prospective financial statements, other than those for internal use only, to either compile or review them and report accordingly (section 500). 4 . Establish procedures and reporting for a compilation service on prospective financial statements (sections 600 to 620). 5. Extend the review service described in the 1980 Guide for a Review of a Financial Forecast to financial projections and multiple projections (sections 700 to 720). 6. Permit an accountant who becomes associated with internal-use-only prospective financial statements to perform a compilation, review or any of a spectrum of other services. The accountant would be required to issue a report indicating the restrictions on the distribution of the prospective financial statements and report, but the report wording would be flexible (section 800). 7. Prohibit an accountant from being associated with prospective financial statements that omit a summary of significant assumptions (section 500). The proposal, however, would permit assumptions to be disclosed in an informal matter, such as computer printed output (indicating data and relationships) from "electronic worksheets" and general purpose financial modeling software, as long as the responsible party believes that the disclosures and assumptions can be understood by users (sections 400 to 410). The proposed guide would not apply to "partial presentations" of prospective financial information, that is, presentations that do not meet the minimum presentation guidelines established in section 400.03 of the guide. Two flowcharts accompany this summary. One flowchart deals with the type of prospective financial statements the responsible party should prepare. The other flowchart deals with the accountant's services with respect to prospective financial statements.

Publication Date


Relational Format



Financial statements -- Standards -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed guide for prospective financial statements;Guide for prospective financial statements; Exposure draft (American Institute of Certified Public Accountants), 1983, Sept. 20



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