The assurance practitioner shall not represent compliance with this ASAE unless the assurance practitioner has complied with the requirements of both this ASAE and ASAE 3000. 

Preconditions for Acceptance

Before agreeing to accept an engagement to report on whether pro forma financial information included in a prospectus or other document has been compiled, in all material respects, on the basis of the applicable criteria, the assurance practitioner shall:

1. Determine that those persons who are to perform the engagement collectively have the appropriate competence and capabilities; (Ref: Para. A10-Aus A10.1)
2. On the basis of a preliminary knowledge of the engagement circumstances and discussion with the responsible party, determine that the criteria that the assurance practitioner expects to be applied are suitable and that it is unlikely that the compilation of the pro forma financial information will be misleading for the purpose for which it is intended;
3. If applicable, evaluate the wording of the assurance practitioner’s conclusion prescribed by applicable law or regulation to determine that it will be possible for the assurance practitioner to express the conclusion so prescribed based on performing the procedures specified in this ASAE; (Ref: Para. A54-A56)
4. Where the sources from which the unadjusted financial information and any acquiree or divestee financial information have been extracted have been audited or reviewed and a modified audit opinion or review conclusion has been expressed, or the report contains an Emphasis of Matter paragraph, consider whether or not applicable law or regulation permits the use of, or reference in the assurance practitioner’s report to, the modified audit opinion or review conclusion or the report containing the Emphasis of Matter paragraph with respect to such sources;
5. If the entity’s historical financial information has never been audited or reviewed, consider whether the assurance practitioner can obtain a sufficient understanding of the entity and its accounting and financial reporting practices to perform the engagement; (Ref: Para. A31)
6. If the event(s) or transaction(s) include(s) an acquisition and the acquiree’s historical financial information has never been audited or reviewed, consider whether the assurance practitioner can obtain a sufficient understanding of the acquiree and its accounting and financial reporting practices to perform the engagement;
7. Obtain the agreement of the responsible party that it acknowledges and understands its responsibility for: (Ref: Para. A11-A12)
   1. Adequately disclosing and describing the applicable criteria to the intended users if these are not publicly available;
   2. Compiling the pro forma financial information on the basis of the applicable criteria; and
   3. Providing the assurance practitioner with:
      • Access to all information (including, if applicable for the purposes of the engagement, information the responsible party has in respect of any acquiree(s) in a business combination transaction), such as records, documentation, and other material, relevant to evaluating whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria;
      • Additional information that the assurance practitioner may request from the responsible party for the purpose of the engagement;
      • Access to those within the entity and the entity’s advisors from whom the assurance practitioner determines it necessary to obtain evidence relating to evaluating whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria; and
      • When needed for purposes of the engagement, access to appropriate individuals within the acquiree(s) in a business combination;

​​​​​​The preparation of the unadjusted financial information used in preparing the pro forma financial information;

​​​The preparation of the pro forma financial information itself;

​​​​The selection of the applicable criteria; and

​​​​​Determine whether the type of assurance requested is acceptable.  (Ref: Para. Aus A10.2)

Agreeing the Terms of the Assurance Engagement

As required by ASAE 3000^[*] the assurance practitioner shall agree the terms of the assurance engagement with the responsible party in writing.  (Ref: Para. Aus A10.3)

The agreed terms of the assurance engagement, as required by ASAE 3000, shall at a minimum, include:

1. the objective(s) and scope of the engagement, including:
   1. the assurance practitioners’ understanding of the purpose of the engagement and the intended users of the assurance report;
   2. confirmation that the assurance practitioner will conduct the engagement in accordance with this ASAE;
   3. the nature, source, time period covered and purpose of the pro forma financial information;
   4. a statement that the assurance practitioner is not responsible for the preparation of the pro forma financial information or for applicable criteria;
   5. if applicable, a statement that an audit is not being performed and that consequently, an audit opinion will be not be expressed;
2. a reference to the expected form and content of any reports to be issued by the assurance practitioner and a statement that there may be circumstances in which a report may differ from its expected form and content; and
   1. an acknowledgement that the entity agrees to provide written representations at the conclusion of the engagement; and;
   2. a statement that the engagement cannot be relied upon to identify fraud, error(s), illegal action(s) or other irregularities that may exist within the entity;
3. the responsibilities of the assurance practitioner, including:
   1. compliance with relevant ethical requirements, including independence;
   2. providing limited or reasonable assurance, as applicable, on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria;
   3. determining whether the applicable criteria, selected by the responsible party for illustrating the significant effects directly attributable to the event(s) or transaction(s), are suitable;
   4. performing assurance procedures on the responsible party’s compilation of the pro forma financial information on the basis of the responsible party’s specified applicable criteria to obtain sufficient appropriate evidence for the type of assurance required; (Ref: Para. Aus A10.4)
   5. issuing a written assurance report and any other reporting agreed with the responsible party;^[*]
   6. where applicable, and once satisfied it is appropriate to, providing consent in the required form to the responsible party to the inclusion of the assurance practitioner’s name and assurance report in the prospectus;
   7. for the purposes of the engagement, the assurance practitioner is not responsible for:
      • updating or re-issuing any previously issued audit report or review conclusion on any financial information used in compiling the pro forma financial information; and
      • performing an audit or review of any financial information used in compiling the pro forma financial information or the pro forma financial information itself;
4. the responsibilities of the responsible party including those set out in paragraph 13(g) of this ASAE; and
5. such other terms and conditions that the assurance practitioner determines are appropriate in the engagement circumstances.

If the assurance practitioner is unable to agree to a change in the terms of the engagement, and is not permitted by the responsible party to continue the original engagement, the assurance practitioner shall: (Ref: Para. Aus A12.1)

1. withdraw from the engagement where possible under applicable law or regulation; and
2. determine whether there is any obligation, either contractual or otherwise, to report the circumstances to parties other than the responsible party.

The assurance practitioner shall use professional judgement^[*] to design and perform procedures whose nature, timing and extent are appropriate to the type of assurance required.  (Ref: Para. Aus A12.2)

Determining the Suitability of the Applicable Criteria

The assurance practitioner shall determine whether the applicable criteria are suitable, as required by ASAE 3000^[3], and in particular shall determine that they include, at a minimum, that:

1. The unadjusted financial information be extracted from an appropriate source; (Ref: Para. A4-A5, A27)
2. The pro forma adjustments be:
   1. directly attributable to the event(s) or transaction(s); (Ref: Para. A13-Aus A13.1)
   2. factually supportable; and (Ref: Para. A14)
   3. consistent with the entity’s applicable financial reporting framework and its accounting policies under that framework; and (Ref: Para. A15-A16)
3. Appropriate presentation be made and disclosures be provided to enable the intended users to understand the information conveyed. (Ref: Para. A2-A3, A42)

In addition, the assurance practitioner shall assess whether the applicable criteria are:

1. Consistent, and do not conflict, with applicable law or regulation; and
2. Unlikely to result in pro forma financial information that is misleading.

Materiality

When planning and performing the engagement, the assurance practitioner shall consider materiality^[#] with respect to evaluating whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria.  (Ref: Para. A17‑Aus A18.1)

Obtaining an Understanding of How the Responsible Party Has Compiled the Pro Forma Financial Information and Other Engagement Circumstances

The assurance practitioner shall obtain an understanding of: (Ref: Para. A19)

1. The event(s) or transaction(s) in respect of which the pro forma financial information is being compiled;
2. How the responsible party has compiled the pro forma financial information; (Ref: Para. A20-A21)
3. The nature of the entity and any acquiree or divestee, including: (Ref: Para. A22-A23)
   1. Their operations;
   2. Their assets and liabilities; and
   3. The way they are structured and how they are financed;
4. Relevant industry, legal and regulatory, and other external factors pertaining to the entity and any acquiree or divestee; and (Ref: Para. A24-A26)
5. The applicable financial reporting framework and the accounting and financial reporting practices of the entity and of any acquiree or divestee, including their selection and application of accounting policies.

The understanding shall be sufficient to enable the assurance practitioner to plan and design assurance procedures appropriate to the type of assurance required. 

Obtaining Evidence about the Appropriateness of the Source from Which the Unadjusted Financial Information Has Been Extracted

The assurance practitioner shall determine whether the responsible party has extracted the unadjusted financial information from an appropriate source.  (Ref: Para. A27‑Aus A28.2)

If there is no audit or review report on the source from which the unadjusted financial information has been extracted, the assurance practitioner shall perform procedures to be satisfied that the source is appropriate.  (Ref: Para. A29‑A31)

If the assurance practitioner is not able to perform the procedures referred to in paragraph 19 of this ASAE in order to obtain sufficient appropriate evidence^[*] on which to assess whether the source from which the unadjusted financial information has been extracted is appropriate, this constitutes a limitation of scope on the assurance practitioner’s work, and the assurance practitioner shall modify the conclusion in the assurance report in accordance with ASAE 3000.^[#]

The assurance practitioner shall determine whether the responsible party has appropriately extracted the unadjusted financial information from the source.

Obtaining Evidence about the Appropriateness of the Pro Forma Adjustments

In evaluating whether the pro forma adjustments are appropriate, the assurance practitioner shall determine whether the responsible party has identified the pro forma adjustments necessary to illustrate the impact of the event(s) or transaction(s) at the date or for the period of the illustration.  (Ref: Para. A32)

In determining whether the pro forma adjustments are in accordance with the applicable criteria, the assurance practitioner shall determine whether they are:

1. Directly attributable to the event(s) or transaction(s); (Ref: Para. A13-Aus A13.1)
2. Factually supportable. If acquiree or divestee financial information is included in the pro forma adjustments and there is no audit or review report on the source from which such financial information has been extracted, the assurance practitioner shall perform procedures to be satisfied that the financial information is factually supportable; and (Ref: Para. A14, A33-A38)
3. Consistent with the entity’s applicable financial reporting framework and its accounting policies under that framework. (Ref: Para. A15-A16)

Modified Audit Opinion or Review Conclusion, or Emphasis of Matter Paragraph, with Respect to the Source from Which the Unadjusted Financial Information Has Been Extracted or the Source from Which the Acquiree or Divestee Financial Information Has Been Extracted

A modified audit opinion or review conclusion may have been expressed with respect to either the source from which the unadjusted financial information has been extracted or the source from which the acquiree or divestee financial information has been extracted, or a report containing an Emphasis of Matter paragraph may have been issued with respect to such source. In such circumstances, if the applicable law or regulation does not prohibit the use of such a source, the assurance practitioner shall evaluate:

1. The potential consequence on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria; (Ref: Para. A39)
2. What further appropriate action to take; and (Ref: Para. A40)
3. Whether there is any effect on the assurance practitioner’s ability to report in accordance with the terms of the engagement, including any effect on the assurance report.

Source from Which the Unadjusted Financial Information Has Been Extracted or Pro Forma Adjustments Not Appropriate

If, on the basis of the procedures performed, the assurance practitioner identifies that the responsible party has:

1. Used an inappropriate source from which to extract the unadjusted financial information; or
2. Omitted a pro forma adjustment that should be included, applied a pro forma adjustment that is not in accordance with the applicable criteria or otherwise inappropriately applied a pro forma adjustment,

the assurance practitioner shall discuss the matter with the responsible party. If the assurance practitioner is unable to agree with the responsible party as to how the matter can be resolved, the assurance practitioner shall evaluate what further action to take. (Ref: Para. A40)

Obtaining Evidence about the Calculations within the Pro Forma Financial Information

The assurance practitioner shall determine whether the calculations within the pro forma financial information are arithmetically accurate.

Evaluating the Presentation of the Pro Forma Financial Information

The assurance practitioner shall evaluate the presentation of the pro forma financial information. This shall include consideration of:

1. The overall presentation and structure of the pro forma financial information, including whether it is clearly labelled to distinguish it from historical or other financial information; (Ref: Para. A2-A3)
2. Whether the pro forma financial information and related explanatory notes illustrate the impact of the event(s) or transaction(s) in a manner that is not misleading; (Ref: Para. A41-Aus A41.1)
3. Whether appropriate disclosures are provided with the pro forma financial information to enable the intended users to understand the information conveyed; and (Ref: Para. A42)
4. [Deleted by the AUASB. Refer Aus 26.1.]

Whether the assurance practitioner has become aware of any significant events, related to the unadjusted financial information that have occurred subsequent to the date of the source from which the unadjusted financial information has been extracted, that may require reference to, or disclosure in, the pro forma financial information.  (Ref: Para. Aus A43.1)

The assurance practitioner shall read the other information included in the prospectus containing the pro forma financial information to identify material inconsistencies, if any, with the pro forma financial information or the assurance report.  If, on reading the other information, the assurance practitioner identifies a material inconsistency or becomes aware of a material misstatement of fact in relation to the pro forma financial information in that other information, the assurance practitioner shall discuss the matter with the responsible party.  If correction of the matter is necessary and the responsible party refuses to do so, the assurance practitioner shall take further appropriate action.  (Ref: Para. A44)

The assurance practitioner shall request written representations^[*] from the responsible party that:

1. In compiling the pro forma financial information, the responsible party has identified all appropriate pro forma adjustments necessary to illustrate the impact of the event(s) or transaction(s) at the date or for the period of the illustration in accordance with the applicable criteria; (Ref: Para. A45)
2. The pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria;

3. They accept, acknowledge, and understand their responsibility for those matters described in paragraphs 13(g) to Aus 13.3 inclusive, of this ASAE;
4. They acknowledge the intended use of the pro forma financial information;
5. There are no currently anticipated material changes to be made to the pro forma financial information between the date of the assurance report and the relevant date;
6. There has been no matter, event, transaction, or issue that has arisen or been discovered subsequent to the preparation of the pro forma financial information that may impact, or require adjustment to, the pro forma financial information;
7. They have provided the assurance practitioner with a listing of all known uncorrected immaterial misstatements in the pro forma financial information, together with an acknowledgement that the responsible party is responsible for confirming that such misstatements are immaterial; and
8. Cover such other written representations as that the assurance practitioner determines are appropriate in the engagement circumstances.

The date of the representation letter shall be as near as practicable to, but not after, the date of the assurance report.

If the assurance practitioner has sufficient doubt about the competence, integrity, ethical values, or diligence of those providing the written representations or if the representations received are inconsistent with other evidence, the assurance practitioner shall:

1. discuss the matter with the responsible party;
2. perform other procedures to attempt to resolve any inconsistencies;
3. re-evaluate the integrity of the responsible party and evaluate the effect this may have on the reliability of representations (oral or written) and evidence in general; and
4. take appropriate action, including determining the possible effect on the assurance conclusion in the assurance report.

If the representations remain inconsistent with other evidence, the assurance practitioner shall reconsider the assessment of the competence, integrity, ethical values, or diligence of the responsible party or of its commitment to an enforcement of these, and shall determine the effect that this may have on the reliability of representations (oral or written) and evidence in general.

[Deleted by the AUASB.  Refer Aus 29.1.]

The assurance practitioner shall conclude as to whether the assurance practitioner has obtained reasonable or limited assurance, as appropriate, on the compilation of the pro forma financial information.  (Ref: Para. A46‑A48)

In order to form that conclusion, the assurance practitioner shall conclude whether the assurance practitioner has obtained sufficient appropriate evidence about whether the compilation of the pro forma financial information is free from material omission, or inappropriate use or application of, a pro forma adjustment(s).  That conclusion shall include an evaluation of whether the responsible party has adequately disclosed and described the applicable criteria in the prospectus to the extent that these are not publicly available.  (Ref: Para. A49‑A50)

Unmodified Conclusion

The assurance practitioner shall express an unmodified conclusion when the assurance practitioner concludes with reasonable assurance that the pro forma financial information has been compiled, in all material respects, by the responsible party on the basis of the applicable criteria.

In a limited assurance engagement, the assurance practitioner shall express an unmodified conclusion when the assurance practitioner concludes that nothing has come to the assurance practitioner’s attention that causes the assurance practitioner to believe that the pro forma financial information has not been compiled, in all material respects, by the responsible party on the basis of the applicable criteria.

Modified Conclusion

[Deleted by the AUASB.  Refer Aus 32.1.]

If the assurance practitioner concludes that a modified conclusion is appropriate in accordance with ASAE 3000, the assurance practitioner shall discuss the matter with the responsible party. If the responsible party does not agree to make the necessary changes, the assurance practitioner shall either:

1. withhold the assurance report;
2. consider seeking legal advice;
3. withdraw from the engagement, where practical and possible under applicable law or regulation; or
4. modify the conclusion in accordance with the requirements in ASAE 3000^[4] regarding modified conclusions.

[Deleted by the AUASB.  Refer Aus 32.1(d).]

Emphasis of Matter Paragraph

In some circumstances, the assurance practitioner may consider it necessary to draw users’ attention to a matter presented or disclosed in the pro forma financial information or the accompanying explanatory notes.  This would be the case when, in the assurance practitioner’s opinion, the matter is of such importance that it is fundamental to users’ understanding of whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria.  In such circumstances, the assurance practitioner shall include an Emphasis of Matter paragraph^[*] in the assurance practitioner’s report provided that the assurance practitioner has obtained sufficient appropriate evidence that the matter does not affect whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria.  Such a paragraph shall refer only to information presented or disclosed in the pro forma financial information or the accompanying explanatory notes.

If applicable, the assurance practitioner’s conclusion on the compilation of the pro forma financial information shall be clearly separated from assurance on any other type of financial information within the assurance report.

The assurance practitioner’s report shall, at a minimum, include the following basic elements: (Ref: Para. A57-Aus A57.1)

1. A title that clearly indicates that the report is an independent assurance report; (Ref: Para. A51)
2. An addressee(s), as agreed in the terms of engagement; (Ref: Para. A52)
3. Introductory paragraphs that identify: (Ref: Para. A53)
   1. The pro forma financial information;
   2. The source from which the unadjusted financial information has been extracted, and whether or not an audit or review report on such a source has been published;
   3. The period covered by, or the date of, the pro forma financial information; and
   4. The applicable criteria on the basis of which the responsible party has performed the compilation of the pro forma financial information, and the source of the criteria;
4. A statement that the responsible party is responsible for compiling the pro forma financial information on the basis of the applicable criteria;
5. A description of the assurance practitioner’s responsibilities, including statements that:
   1. The assurance practitioner’s responsibility is to conclude about whether the pro forma financial information has been compiled, in all material respects, by the responsible party on the basis of the applicable criteria;
   2. For purposes of this engagement, the assurance practitioner is not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor has the assurance practitioner, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information; and
   3. The purpose of pro forma financial information included in a prospectus is solely to illustrate the impact of a significant event(s) or transaction(s) on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, the assurance practitioner does not provide any assurance that the actual outcome of the event(s) or transaction(s) at that date would have been as presented;
6. A statement that the engagement was performed in accordance with ASAE 3420 Assurance Engagements to Report on the Compilation of Pro Forma Historical Financial Information Included in a Prospectus or other Document, which requires that the assurance practitioner plan and perform procedures to obtain the required type of assurance about whether the responsible party has compiled, in all material respects, the pro forma financial information on the basis of the applicable criteria;
7. A statement that the firm of which the assurance practitioner is a member, applies ASQM 1, or other professional requirements, or requirements in law or regulation, that are at least as demanding as ASQM 1. If the assurance practitioner is not a professional accountant, the statement shall identify the professional requirements, or requirements in law or regulation, applied that are at least as demanding as ASQM 1;
8. [Deleted by the AUASB. Refer Aus 35.1 (h).]

8. A statement that the assurance practitioner complies with the independence and other relevant ethical requirements related to assurance engagements, or other professional requirements, or requirements imposed by law and regulation, applied that are at least as demanding. If the assurance practitioner is not a professional accountant, the statement shall identify the professional requirements, or requirements imposed by law or regulation, applied that are at least as demanding as ASA 102 related to assurance engagements;

9. Statements that:
   1. In a reasonable assurance engagement to report on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria, the engagement has involved performing procedures to assess whether the applicable criteria used by the responsible party in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event(s) or transaction(s), and to obtain sufficient appropriate evidence about whether:
      • The related pro forma adjustments give appropriate effect to those criteria; and
      • The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information; or

9.  
   2. In a limited assurance engagement to report on whether anything has come to the assurance practitioner’s attention that caused the assurance practitioner to believe that the pro forma financial information has not been compiled, in all material respects, on the basis of the applicable criteria, the engagement has involved performing limited procedures to assess whether the applicable criteria used by the responsible party in the compilation of the pro forma financial information provide a reasonable basis for presenting the significant effects directly attributable to the event(s) or transaction(s), and to obtain sufficient appropriate evidence about whether:
      • The related pro forma adjustments give appropriate effect to those criteria; and
      • The pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information;

9.  
   3. The procedures selected depend on the assurance practitioner’s professional judgement, having regard to the assurance practitioner’s understanding of the nature of the entity, the event(s) or transaction(s) in respect of which the pro forma financial information has been compiled, the type of assurance to be expressed on the compilation, and other relevant engagement circumstances; and
   4. The engagement also involves evaluating the overall presentation of the pro forma financial information;
10. Unless otherwise required by applicable law or regulation:
    1. The assurance practitioner’s reasonable assurance unmodified conclusion uses one of the following phrases, which are regarded as being equivalent: (Ref: Para. A54-A56)
       • The pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria; or
       • The pro forma financial information has been properly compiled on the basis stated; or

10.  
    2. The assurance practitioner’s limited assurance unmodified conclusion uses one of the following phrases, which are regarded as being equivalent: (Ref: Para. A54-A56)
       • nothing has come to the assurance practitioner’s attention that causes the assurance practitioner to believe that the pro forma financial information has not been compiled, in all material respects, on the basis of the applicable criteria; or
       • nothing has come to the assurance practitioner’s attention that causes the assurance practitioner to believe that the pro forma financial information has not been properly compiled on the basis stated; or
    3. If the assurance practitioner’s conclusion is modified, include a clear description of the reasons for the modification, with the effects appropriately quantified, to the extent reasonably practicable and disclosed in the report;

An independence, or disclosure of interest, statement;

11. The assurance practitioner’s signature;
12. [Deleted by the AUASB. Refer Aus 35.5.]

The date of the assurance practitioner’s report shall be the date the assurance practitioner signs the report; and

13. The assurance practitioner’s address.