The preparation and evaluation of pro forma financial statements involve forecasting future financial performance based on historical data and assumptions. The simplified procedures typically involve projecting revenues, expenses, and other financial metrics to estimate future income and financial position. To prepare a pro forma income statement, one would typically start with historical financial data and adjust it for anticipated changes in revenue, expenses, and other factors. This process requires careful analysis and consideration of various assumptions to ensure the accuracy and reliability of the projections. Similarily, preparing a pro forma balance sheet invovles estimating the future financial position of a company by projecting assets, liabilities, and equity based on expected changes in the business environment. Ethical issues that may arise in the preparation and evaluation of pro forma financial statements include: Accuracy and Transparecy, Conflict of Interest, Disclosure