Pro Forma Financial Information What is the difference between historical financial information and pro forma financial information? Discuss the guidelines that should be adhered to when presenting pro forma financial information
Historical financial information describes actual results of financial information. In contrast, pro forma financial information shows "what the significant effects on historical financial information might have been had a consummated or proposed transaction (or event) occurred at an earlier date" (AT 401, paragraph .04).
The presentation of pro forma financial information should adhere to the following guidelines:
• It should describe the transaction or event that is reflected in the pro forma financial information.
• It should describe the source of historical financial information upon which the pro forma financial information is based.
• It should describe significant assumptions used to develop the pro format adjustments.
• It should describe any significant uncertainties about those assumptions.
• It should indicate that pro format financial information should be considered in conjunction with the historical financial information upon which the pro forma financial information is based.
• It should make clear that the pro forma financial information is not necessarily indicative of results that would have been achieved had the transaction or event actually taken place at an earlier time.
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