What a Reporting Accountant Actually Does on a Listing

For a management team going through a first listing, the reporting accountant is one of the least understood roles in the room. Everyone knows what the lawyers and the broker do. The reporting accountant produces a set of documents with unfamiliar names, asks for a great deal of information, and sits, quietly, on the critical path.

The core workstreams

Historical financial information. The financial track record that goes into the prospectus or admission document, covering a specified number of years and prepared under the framework required for the market. This is not simply the last three sets of statutory accounts stapled together. It frequently requires restatement onto a consistent basis, sometimes a change of framework, and often the construction of a track record for a group that did not exist in its current form throughout the period.

Restating a track record is the workstream that most commonly determines the timetable.

The accountant’s report. An opinion on that historical financial information, which appears in the public document.

The working capital report. A private report to the sponsor or nominated adviser supporting the working capital statement. This involves a detailed integrated model, a reasonable worst case sensitivity, and an assessment of headroom over the required period. It is where a lot of management time goes, because the model has to withstand scrutiny at a level most private companies have never applied to their own forecasts.

The financial position and prospects procedures report. A report on whether the issuer has established procedures giving a reasonable basis for the directors to make proper judgements about the financial position and prospects of the business. In practice this is an examination of your finance function, systems and controls, and it frequently identifies work that has to be completed before admission.

Comfort letters. Confirmations to the sponsor and underwriters on financial information in the document, including at pricing and at admission.

Where the timetable slips

Historical financial information that needs restating. Discovering in month two that the track record requires a framework conversion, or that a group reorganisation makes the comparatives non-trivial, resets everything.

The FPPP work finding gaps. If the procedures report identifies that your finance function lacks something material, that has to be remediated before admission. Building a control you do not have takes months, not weeks.

A working capital model that cannot bear weight. Most private company forecasts are not built to be interrogated line by line under sensitivity. Rebuilding the model mid-process, while also running the business and the transaction, is a common cause of delay.

Late appointment. The reporting accountant needs time on the track record before other workstreams can rely on it. Appointing late compresses the one workstream least able to be compressed.

What to do early

Appoint early. Before the process formally begins if possible. Much of the historical financial information work can be done in advance, independently of the transaction timetable.

Sort the group structure first. Reorganisations undertaken during a process complicate the track record and consume time. If a restructuring is needed, do it before the process starts.

Build the model properly. Integrated profit and loss, balance sheet and cash flow, driver-based, with scenarios. Not a growth percentage on last year. This is the single most valuable preparation because it is used for the working capital report, the equity story and the board’s own decision-making.

Assess your finance function honestly. Are your controls documented? Does your monthly reporting produce numbers you would put in front of the market? Is there a finance team capable of the reporting cadence of a listed company? The FPPP work will answer these questions. Better to answer them yourself first.

Decide who audits and who reports. Using a separate firm for the reporting accountant role keeps the audit relationship clean and brings a fresh perspective to the track record. Using the existing auditor is faster on familiarity. Both are defensible; make it a decision rather than a default.

The underlying point

The reporting accountant’s work is the part of a listing that most depends on things that happened before the process started: how your accounts were prepared, how your group was structured, and whether your finance function can produce reliable numbers.

Very little of that can be fixed quickly once the timetable is running. Businesses that list smoothly tend to have spent the preceding year preparing to be looked at.