Compilations of Future-oriented Financial Information (FOFI) and Pro Forma

The AASB discussed issues related to the approval of the Canadian Standard on Related Services (CSRS) 4250, Compilation Engagements on Future-oriented Financial Information and Pro Forma. Key issues discussed include:

• all remaining issues and final changes to the standard, including the effective date; and
• final due process items, including:
  • determining whether re-exposure is required – given the nature of the comments received from Canadian interested and affected parties and resulting amendments to the exposed CSRS, the AASB concluded that re-exposure is not necessary as it would not likely result in new information that would change any of the AASB's decisions;
  • reviewing the draft Basis for Conclusions;
  • providing input on the implementation risk analysis; and
  • reviewing the summary of due process steps completed.

Following discussion, the AASB unanimously voted:

• not to re-expose the CSRS; and
• to approve CSRS 4250 and withdraw Assurance and Related Services Guideline (AuG)-16, Compilation of a Financial Forecast or Projection.

The CSRS is effective for compilation engagements where the compilation engagement report is dated on or after July 1, 2028, with earlier application permitted.

The CSRS is expected to be published in the June 2026 Handbook - Assurance update, providing an approximately 24-month implementation period.

The AASB discussed the proposed Canadian Standard on Related Services (CSRS) 4250, Compilation Engagements on Future-oriented Financial Information and Pro Forma. Key issues discussed included:

• staff recommendations on remaining issues arising from Exposure Draft (ED) outreach, arising from Board feedback from the June and September meetings;
• remaining edits from members’ final read of the marked-up proposed CSRS following ED changes; and
• views on the draft Basis for Conclusions, including whether any significant matters are missing.

The AASB anticipates approval of the final standard at its March 2026 meeting.

The AASB discussed key issues arising from outreach on the Exposure Draft of a new Canadian Standard on Related Services (CSRS) 4250, “Compilation Engagements on Future-oriented Financial Information and Pro Forma.” Key issues discussed included:

• revising the Compilation Engagement Report title to clearly identify the type of FOFI (e.g., forecasted FOFI or projected FOFI);
• allowing for an implementation period of at least 24 months following issuance of the CSRS and clarifying within the CSRS that early application is permitted; and
• adding application material without expanding the scope of the CSRS, to explain that while a practitioner would not be able to assert compliance with the CSRS, it may be adapted as necessary in the circumstances for use in the compilation of a forecast, projection or pro forma of non-financial information.

At its January 2026 meeting, the AASB will consider any remaining issues and perform a final read of the CSRS. The Board anticipates approval of the final standard in Spring 2026.

The AASB discussed key issues arising from outreach on the Exposure Draft of a new Canadian Standard on Related Services (CSRS) 4250, “Compilation Engagements on Future-oriented Financial Information and Pro Forma.” Key issues discussed included the following:

• Scoping – Clarifying in the application material that the scope exclusion for accounting, business advisory, and consulting services (para. 2(c)), applies when any resulting financial information would only be used by management for internal purposes.
• Basis of accounting – Adding the basis of accounting described in para. 28(ii) to para. 7 for completeness. To better align with the engagement acceptance outcomes, the Board agreed to make this additional basis of accounting conditional on neither of the conditions for acceptance in para. 28(a) or (b) being met.
• Work effort – Agreeing that management’s acknowledgement of responsibility for the final compiled financial information in para. 38 is complete, as it inherently includes all the information used to compile it. The Board further agreed that practitioners are not precluded from obtaining a detailed written acknowledgement if they choose, and such practices can be incorporated within a firm’s quality management policies and procedures.

At its next meeting, the AASB will consider the remaining issues, including the compilation engagement report, effective date, and any implementation challenges identified. The Board anticipates approval of the standard by Spring 2026.

The AASB received an update on the preliminary results of outreach on the Exposure Draft proposing a new Canadian Standard on Related Services (CSRS) 4250, “Compilation Engagements on Future-oriented Financial Information and Pro Forma.” The proposed standard would replace Assurance and Related Services Guideline 16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• the broad engagement with interested and affected parties undertaken through various outreach activities, including surveys, meetings, field testing, roundtable discussions, and response letters; and
• the key themes from the outreach, noting the proposal was well-received. The feedback from outreach will inform potential revisions to the proposed standard.

The AASB expressed appreciation for the outreach efforts and emphasized the importance of addressing feedback to ensure the proposed standard meets user needs.

The AASB unanimously approved an exposure draft for proposed Canadian Standard on Related Services (CSRS) 4250, Compilation Engagements on Future-oriented Financial Information and Pro Forma. The proposed standard would replace Assurance and Related Services Guideline 16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• proposed limited consequential amendments to CSRS 4200, Compilation Engagements;

• questions that will accompany proposed CSRS 4250; and

• other considerations, including comment period, the outreach plan, and compliance with the Board’s due process.

The AASB expects to issue an exposure draft in mid-September 2024, with a 90-day comment period.

The AASB discussed issues related to the project to develop a proposed Canadian Standard on Related Services (CSRS) on Compilation Engagements on Future-oriented Financial Information and Pro forma that would replace Assurance and Related Services Guideline (AuG)16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• that compilations of all types of pro forma are within the scope of the proposed CSRS;
• that the effective date convention of the standard should be based on the report date;
• in the defined terms, that:
  • pro forma adjustments present the effects of events or transactions on the base financial information, and added guidance to describe different pro forma adjustments that present the effects that are directly or indirectly attributable to the events or transactions;
  • the starting point of base financial information is historical financial information; and
  • a practitioner is “the individual conducting the engagement”;
• that pro forma is ordinarily presented in columnar format; however, in rare circumstances, management may select a different format (e.g., rows or disclosure in the notes); and
• that the period covered by the FOFI and pro forma is influenced by various factors (e.g., the intended use), and that for periods beyond one-year “the degree of uncertainty” increases.

The AASB expects to approve an exposure draft at its June 2024 meeting, with a comment period starting in the fall of 2024.

The AASB discussed issues related to the project to develop a proposed Canadian Standard on Related Services (CSRS) on compilation engagements on FOFI that will replace Assurance and Related Services Guideline (AuG) 16, Compilation of a Financial Forecast or Projection. This meeting focused on addressing the incorporation of pro forma financial information in the proposed CSRS. Key matters discussed included:

• identifying the types of pro forma for inclusion within the proposed CSRS;
• defining pro forma and related terminology;
• distinguishing between pro forma, forecasts, and projections; and
• specifying incremental requirements, and application and other explanatory material, for engagement acceptance, work effort, and reporting.

The AASB expects to approve an exposure draft in the summer of 2024, with an exposure period commencing in the fall of 2024.

The AASB discussed issues related to the project to develop a Canadian Standard on Related Services (CSRS) on Compilation Engagements on Future-oriented Financial Information that will replace Assurance and Related Services Guideline 16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• revisions to the definitions of “hypotheses”, “hypothetical assumptions”, and “projection”, and how these changes enhance the interconnectivity of those terms;
• whether there should be a requirement to disclose the purpose of the projection and, if so, what form such disclosure may take;
• the proposed reporting requirements and illustrative compilation engagement reports; and
• whether the proposed CSRS should include a requirement for the practitioner to request a written representation letter from management.

The AASB discussed issues related to the project to develop a Canadian Standard on Related Services (CSRS) on compilations of future-oriented financial information that will replace AuG-16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• the definitions of “best estimate,” “best estimate assumptions,” “hypothetical assumptions,” “forecast,” and “projection”; 
• the practitioner’s responsibility when actual financial results of an expired period are incorporated into the compiled future-oriented financial information; 
• the relationship between three key dates: 
  • the effective date of the underlying assumptions;
  • the date management assumes responsibility for the compiled future-oriented financial information; 
  • the date of the compilation engagement report;
• the practitioner’s work effort when assisting management to compile future-oriented financial information, including the underlying assumptions; and 
• the project’s timeline, including the planned issuance of the exposure draft in September 2024. 

The AASB discussed issues related to the project to develop a new Canadian Standard on Related Services on compilations of future-oriented financial information that will replace Assurance and Related Services Guideline (AuG) 16, Compilation of a Financial Forecast or Projection. Key issues included:

• the definitions of “forecast”, “hypotheses”, and “projection”;
• the definition of “pro-forma financial information”; and
• the scope of the proposed new standard.

The AASB discussed issues related to developing a new Canadian standard on compilations of FOFI. This new standard will replace Assurance and Related Services Guideline (AuG) 16, Compilation of a Financial Forecast or Projection. Key issues discussed included:

• whether the new standard should clarify the AuG-16 definitions of “forecast” and “projection”;
  
• whether the new standard’s scope should include budgets and pro forma financial information; and
• what requirements and guidance might be needed in the new standard to guide the practitioner to compile FOFI that is not misleading.

The AASB received an update on its Compilation of FOFI project, including a revised timeline. The Board discussed the proposed approaches to using the FOFI Reference Group and to developing a new Canadian Standard on Related Services.

The AASB unanimously approved a notice that will be placed in Assurance and Related Services Guideline (AuG) 6, Examination of a Financial Forecast or Projection Included in a Prospectus or Other Public Offering Document, and AuG-16, Compilation of a Financial Forecast or Projection. This notice was necessary because of the Accounting Standards Board’s (AcSB) decision to remove Section 4250, Future-oriented Financial Information, from the CPA Canada Handbook – Accounting and retain the content as non-authoritative guidance for future-oriented financial information in the CPA Canada Standards and Guidance Collection.

The AASB unanimously agreed not to expose the notice for public comment because it was developed in response to the AcSB’s decision and there are no other choices for the AASB.

Once AASOC confirms that the AASB followed due process with proper regard for the public interest, it is expected the notice in AuG-6 and AuG-16 will be issued in the CPA Canada Handbook – Assurance in June 2020.