Discussion:Financial Statements w/in Business Plans
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| Revision as of 19:23, 1 October 2007 Swheeler (Talk | contribs) (I am in the same) ← Previous diff |
Current revision Skq9545 (Talk | contribs) (I think you migh) |
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| + | {{ForumReplyPost|UserID=Skq9545|Date=October 1, 2007|Text=I think you might be wise to state that you are restating the financial statemtns. If you are doing preparing a forecast or projection, you need to state "The accompanying projection and this report were prepared for (state special purpose) and should not be used for any other purpose." | ||
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| + | The standard wording in the compilation "A compilation is limited to presenting in the form of a forecast/projection information that is the representation of management and does not include evaulation of the support for the assumptions underlying the forecast/projection. Another line to be added is "Furthermore, even if (describe hypothethical assumption, for example, "the loan is granted and the plant is expanded"), there will usually be differences between the forecasted/projected and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. We(I) have no responsibility to update this report for events and circumstances occurring after the date of this report. }} | ||
Current revision
Discussion Forum Index --> Accounting Questions --> Financial Statements w/in Business Plans
| 1 September 2007 | |
| I have had several clients ask for my help in doing a business plan. They commonly contain financial statements. These were to go to banks, and other possible investors. I checked out several books from the library on the subject, some of these books claimed to be well known on the subject. Not one mentioned securities laws (or state blue sky laws); nor that a bank may require GAPP reporting (or OCBA Tax), accountant transmital letters etc.. It seems to me that this could be an issue. I am not a CPA, but our state allows non-CPAs to perform functions other than attest functions. Any comments or ideas? | |
Bottom Line (talk|edits) said: | 1 September 2007 |
| The financials I've normally seen in business plans are pro forma's (otherwise known as predicting the future or fortune telling). When I was in risk management in the commercial banking industry, I loved to see business plans. After the loans were made (also known as after the horses have left the barn) and the actual financial statements started coming in, it gave me lots of support for why I had criticized the loan in the first place! Overaggressive pro forma's, lack of knowledge of the industry, lack of knowledge of governmental regulations, etc. The loan officers had thought that if there was a business plan, the company would succeed. (Yes, I'm a sick puppy!) | |
| 2 September 2007 | |
| Yes, I noticed that most are pro forma, but they usually have a historical (real) balance sheet at least. Your last sentence is so true. | |
| 23 September 2007 | |
| I did a little more research on this myself. Effective in July 2005 for compilation engagements entered into after 12/15/05, SSARS 14 expands the application of SSARS to include pro-forma information. "Prospective" financial statements were already covered. I think most clients today handle the business plan themselves by using a computer program. But, I still get calls to help clients put them together. To the extent historical, pro-forma or prospective financial statements are included, you would have a compilation at a minimum, and hence the report(s) would be triggered. I hope to add to this post as I determine what my approach will be. If anyone has thought about, or faced this (hopefully rare) issue, I'd like to know your thoughts. | |
| 1 October 2007 | |
| I am in the same boat, but I am a CPA and a member of the AICPA. I am putting together a package for a client for a large commercial loan that will include both historical and prospective financial data. The financials prepared in the past have been tax basis only. I will be preparing compiled accounting basis financials statements with footnotes. No compilation reports have been issued in prior years. I am wondering if I need to make reference to prior years in that I am essentially restating the financial information for those years, or since no compilation was ever prepared, do I need to bother? Any comments are welcome, it's been awhile since I've put such a large package together. | |
| October 1, 2007 | |
| I think you might be wise to state that you are restating the financial statemtns. If you are doing preparing a forecast or projection, you need to state "The accompanying projection and this report were prepared for (state special purpose) and should not be used for any other purpose."
The standard wording in the compilation "A compilation is limited to presenting in the form of a forecast/projection information that is the representation of management and does not include evaulation of the support for the assumptions underlying the forecast/projection. Another line to be added is "Furthermore, even if (describe hypothethical assumption, for example, "the loan is granted and the plant is expanded"), there will usually be differences between the forecasted/projected and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. We(I) have no responsibility to update this report for events and circumstances occurring after the date of this report. | |
