Appendix No. 43

to the Order of the Ministry of Finance of the Russian Federation of January 9, 2019 No. 2n

The international standard of the tasks providing confidence 3400 (before MSA 810) "Check of forecast financial information"

The International Standard of the Tasks Providing Confidence (ISTPC) 3400 "Check of forecast financial information" should be considered together with the Preface to the Collection of International standards of quality control, audit, survey checks, the other tasks providing confidence, and tasks on rendering the accompanying services in which requirements to application of MSZOU and the sphere of their application are established.

Introduction

1. The purpose of this The International Standard of the Tasks Providing Confidence (ISTPC) is establishment of standards and provision of instructions for task performance for check of forecast financial information and release of the corresponding conclusions, including procedures of check of the assumptions based on the most exact assessment and hypothesis. This standard is not applied to check of the forecast financial information stated in the generalized or descriptive type, for example in the Section of the annual statement of the organization in which the analysis and assessment is provided by management of financial position and results of activities though many of the procedures specified in it can be suitable for such check.

2. During task on check of forecast financial information the auditor shall obtain sufficient competent evidences of the following factors:

(a) the fact that the management assumptions based on the best assessment, which are the cornerstone of forecast financial information cannot be acknowledged unreasonable, and hypotheses (in the presence of such) answer the purpose of information;

(b) whether forecast financial information properly based on assumptions is prepared;

(c) whether forecast financial information properly is provided and whether all essential assumptions, including accurate specifying are opened in due measure, whether these assumptions are based on the most exact estimates or they are hypothetical;

(d) whether forecast financial information according to the financial reporting for last periods with use of the proper principles of financial accounting is prepared.

3. Forecast financial information - the financial information based on assumptions concerning events which can take place in the future, and possible actions of the organization. It is substantially subjective in character, and its preparation requires use of professional judgment. Forecast financial information can have the form of the forecast or perspective assessment or represent their combination, for example the forecast for one year with indication of perspective assessment for five years.

4. The forecast - the forecast financial information prepared based on assumptions concerning future events which shall take place according to expectations of management, and actions which the management plans to undertake for date of preparation of information (the assumption based on the best assessment).

5. Perspective assessment - the forecast financial information prepared on the basis:

(a) hypothetical assumptions concerning future events and actions of management which will optionally take place for example in cases when some organizations are at the initial stage of business or consider the possibility of considerable change of nature of the activities, or;

(b) combinations of the most exact assessment and hypothetical assumptions.

Such information shows what consequences could step on date of preparation if there were these events and actions (scenario "that if").

6. Forecast financial information can include the financial reporting or one or several financial statement elements and can be prepared:

(a) as the internal management tool, for example, for evaluating possible capital investments, or

(b) for distribution among the third parties, for example, in type:

- the prospectus containing information for potential investors concerning future expectations;

- the annual statement containing shareholder information, regulating authorities and other concerned parties;

- the document with information for creditors which can include, for example, forecasts of cash flow.

7. The management is responsible for preparation and representation of forecast financial information, including for specifying and disclosure of assumptions on which it is based. From the auditor check of forecast financial information and creation of the conclusion on it for increase in trust to such information can be required irrespective of whether it is intended for use by the third parties or for the internal purposes.

Confidence of the auditor concerning forecast financial information

8. Forecast financial information belongs to events and actions which did not happen yet and can not occur. Though can take place of the proof, the confirming assumptions on which forecast financial information is based, such proofs, as a rule, are oriented to the future and, therefore, are speculative by the nature, unlike the proofs which are usually available in case of audit of financial information for the last periods. Therefore, the auditor cannot create opinion concerning whether the results specified in forecast financial information will be achieved.

9. Besides, taking into account types of the proofs used in case of assessment of assumptions on which forecast financial information is based to the auditor can be difficult to provide the conviction degree sufficient for expression of opinion in the form of positive confidence that assumptions do not contain essential misstatements. Therefore, according to this standard in case of creation of the conclusion concerning justification of assumptions of management the auditor provides only the average level of confidence. However, if the auditor believes that he received the proper level of satisfaction, it can express positive confidence in the relation of assumptions.

Acceptance of task

10. Before acceptance of task on check of forecast financial information the auditor considers, among other things, the following questions:

- intended use of information;

- whether information is intended for general or limited distribution;

- nature of assumptions that is whether they are assumptions on the basis of the best assessment or hypothesis;

- elements which shall be included in structure of information;

- the covered period.

11. The auditor shall not accept task or shall refuse it if assumptions are obviously not realistic or if the auditor believes that forecast financial information is inapplicable for the purposes of its intended use.

12. The auditor and the client shall approve task conditions. Both the organization, and the auditor are interested in that the last sent the letter on task performance: it will help to avoid the misunderstanding concerning it. The engagement letter about conditions of task shall contain the questions stated in Item 10, and specifying about responsibility of management for assumptions and for provision to the auditor of all relevant information and the basic data used in case of development of assumptions.

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