On 19 July 2017, the Institute of Chartered Accountants in England and Wales ("ICAEW") published a consultation paper on prospective financial information ("PFI"), which seeks to acquire a mandate for the ICAEW's proposal to update, amend and expand the 2003 guidance (the "2003 Guidance") issued to directors on the subject of PFI. The 2003 Guidance was designed to help directors meet the needs of investors and regulators and to promote the publication of high-quality PFI.
The ICAEW believes that the 2003 Guidance requires amendment due to the following changes since 2003:
- options other than public equity or debt markets have become mainstream sources of new funds for business investment, and businesses tend to prepare PFI when applying to such sources for new or extended funding, despite the sources being private; and
- changes in IT, accountability and governance has heightened board expectations of PFI preparation and management's response to any problems identified in stress-testing.
The ICAEW proposes to make the following changes:
- introduce two new attributes of useful PFI in addition to those that underpin the 2003 Guidance. They state that PFI should (i) be aligned (with other business reporting and communications) and (ii) not be misleading;
- introduce new application notes for preparing PFI in the context of capital markets transactions;
- extend the PFI framework to private fundraisings; and
- broaden the application of the PFI framework.
The deadline for responses is 31 October 2017. An exposure draft of the new guidance, informed by feedback on the consultation paper, is expected to be published next year.
The consultation paper can be accessed here:
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