A company has prepared a forecast for the next three years.

A company has prepared a forecast for the next three years. While examining the forecast, the auditor is considering the contents of the report to be issued under SAE 3400.

The following statements are made regarding the report:

The report should clearly indicate the sources of information used in preparing the prospective financial information.
The report should identify the basis on which the forecast has been prepared and the major assumptions used in arriving at the forecast.
The report should contain positive assurance that the underlying assumptions are accurate and will ultimately result in the forecasted results.
The report should clearly state that the auditor’s responsibility does not include verification of the accuracy of the forecasts.
The report should contain an assurance that the actual results will not materially differ from the forecast if the assumptions are reasonable.

Which ONE of the following is correct?

A. Statements 1, 2 and 4 only.

B. Statements 1, 2, 3 and 4 only.

C. Statements 2, 4 and 5 only.

D. Statements 1, 3, 4 and 5 only.