1. Scope of application
01. Standard 3400 specifies and guides the responsibilities of auditors and audit firms (hereinafter referred to as “auditors”) in Perform contract-based services for testing and reporting on future financial information, including procedures for testing hypothetical assumptions and best-value estimates.Standard No. 3400 This does not apply to the examination of future financial information expressed in general or interpretive terms, such as the management's performance analysis in an entity's annual report., although many of the procedures prescribed in this Standard may be suitable for examining such future financial information.
2. Objectives
02. When performing a service contract for auditing future financial information, the auditor and the audit firm must obtain sufficient appropriate evidence regarding:
(a) Are the best-estimate assumptions used by Management as the basis for preparing future financial information not unreasonable, and if hypothetical assumptions are used, are they consistent with the purpose of providing the information?
(b) Whether future financial information is appropriately prepared based on assumptions;
(c) Whether future financial information is presented appropriately and whether all material assumptions are adequately disclosed, including whether they are clearly stated as best estimate assumptions or hypothetical assumptions;
(d) Whether future financial information is prepared on a basis consistent with past financial information and applies appropriate accounting policies.
3. Responsibilities of the auditor, the audit firm, and the audited entity
03. Auditors and audit firms must comply with the provisions and guidance of this Standard in agreeing upon and performing service contracts for testing future financial information.
The entity being audited (client) must have the necessary understanding of the regulations and guidance of this Standard to coordinate work and manage relationships related to the negotiation and execution of a service contract for auditing future financial information.
04. Parties using the test results must have the necessary understanding of the provisions and guidance of this Standard in order to properly use the test results.
4. Standard content
- The purpose of preparing future financial information.
- The auditor's level of assurance regarding future financial information.
- Accept the service contract.
- Understanding business operations
- Reporting period
- Inspection procedures
- Presentation and explanation
- Report on the examination of future financial information
- Appendices
View full text standard 3400