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Practising certificates: it’s time to re-evaluate

Author: ICAEW

Published: 19 Oct 2023

Do accountancy services make up less than 10% of your corporate finance boutique’s turnover? Under new guidelines coming into effect from 1 January 2024, it’s likely you’ll now need a practising certificate (PC).

Previously, smaller corporate finance businesses could provide accountancy and reserved services (as outlined in Annex 1 of the Statement on members engaging in public practice) without principals requiring a PC, as long as these services represented less than 10% of total practice income.

However, the guidelines are being updated to align with other regulations, such as the Money Laundering Regulations, and this 10% threshold will be removed from 1 January 2024.

It is the responsibility of members to make sure they have read the updated ICAEW Statement and apply for a PC if they now require one.

The scenario below provides further information. If you require personal guidance, please contact the ICAEW Advisory Services team  (+44 (0)1908 248 250).

Question

I am a principal in a corporate finance boutique. I prepare information memorandums for the sale of body corporates.

The activity includes:

  • collating information from audited and unaudited financial statements that I do not prepare, or file, at Companies House;
  • budgets and forecasts presented to me by management; and
  • comparison of publicly available industry data.

My turnover derived from the provision of accountancy or reserved services does not regularly exceed 10%. Do I need a PC?

Answer

The guidance on “What is a public practitioner?” has changed. The old statement contained a paragraph stating that if the proportion of an entity’s reported turnover derived from accountancy or reserved services regularly exceeded 10% then you would be considered to be in public practice, therefore under the old statement you did not require a PC.

However, the 10% de minimis has been removed in the new statement to align it with other regulations such as the Money Laundering Regulations that do not contain a de minimis limit for supervision requirements. Therefore, in this situation you would now require a PC.

Practising certificate changes

Guideline changes mean that even if you didn't need a practising certificate before you may now need one. Apply by 30 April.

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