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CPA attestation of financial forecasts by corporations

Question 1: Forecasts

Recent proposals by investors and others have suggested that corporations include financial forecasts in their annual reports. It further has been suggested that the CPA attest to those forecasts.

Instructions:

(a) What arguments are advanced to support the publication of such forecasts?

(b) What arguments are advanced that oppose the publication of such forecasts?

Solution Preview

(a) The basic argument for the publication of financial forecasts in corporate annual reports is to provide the investor with additional information about the future activities of the company upon which to base investment decisions. A second argument is that some investors have access to the forecast data currently; it would be more equitable if all investors had access to such information. The attestation by the CPA to such forecast data would provide ...

Solution Summary

This posting provides arguments for and against the inclusion of financial forecasts in annual reports by corporations. It also gives arguments for and against CPA attestation of the same.

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