What type of engagement is performed on pro forma financial statements?
The CPA can perform an examination or review of pro forma financial information under SSAE’s. Since pro forma financial information is prospective and not historical information, then an audit engagement cannot be performed.
If the CPA expresses positive assurance, then an examination would be performed.
IF the CPA express negative/limited assurance, then a review would be performed. Regardless of the engagement type, the CPA must be independent.
You might also be interested in...
What is the difference between a review under SSAE standards and a review under SSARS?
The deciding factor is the type of client the company is. If the client is an issuer (i.e. public company), then a review engagement is subject to SSAE standards. If the client is a non-issuer (private), then the review engagement is subject to SSARS standards.
What type of assurance does the CPA provide in a review engagement under SSAE standards?
When the CPA performs a “review” engagement under SSAE standards, limited assurance will be provided. Limited assurance is sometimes referred to as negative assurance. When limited assurance is provided, the CPA is basically saying that based on their work, they are “not aware” of any material misstatements. This is different from positive assurance, because under […]
Are quarterly financial statements audited for public companies?
No, quarterly financial statements that are filed with the SEC are not audited. The external audit team would perform a review of the quarterly financial statements, which means that limited assurance is provided. Since the review engagement is for an issuer (public company), then the review is performed in accordance with SSAE standards. Basically, the […]