Pitfalls to avoid
In striving for growth, it may be tempting to make it easier for companies to list by reducing requirements including the extent of independent challenge. However, there may be unintended consequences if changes are made to the ecosystem without compensating measures being introduced.
Further, a relatively small number of companies experiencing challenges could have a broader impact on sustained investor confidence and therefore growth. For example:
- Companies not being ready at IPO to meet the materially greater public company reporting needs and accelerated timetables, could lead to delays in the first reporting cycle and a higher risk of restatements and/or profit warnings.
- If working capital statements in relation to the capital structure at IPO are not appropriately independently challenged there is increased risk of companies having unexpected funding requirements post IPO.
- Prospectuses not identifying material risks, such as around the sustainability of earnings could lead to unexpected results or financial exposures.
Moreover, the impact of unintended consequences may shape public company audit work and the willingness of non-executive directors to take on roles.
Principles for the future
ICAEW outlines four principles to which further evolution of the role of reporting accountants should adhere:
- Considering the work of reporting accountants holistically to maintain balance in the ecosystem;
- Commitment from all stakeholders to proportionate assurance and diligence processes, with a risk focused approach tailored to the specific company and its circumstances;
- Increasing consistency between the requirements at IPO and the ongoing reporting requirements or expectations post IPO, including:
- An approach to internal controls that creates greater alignment between the FPPP framework and the directors’ declaration of material control effectiveness.
- Aligning more closely the framework of assessing the company’s working capital position at IPO with that of going concern reporting as a public company.
- Seeking to increase the awareness and understanding of the extent of assurance and diligence that takes place at IPO, providing greater insight to investors and clarity of expectations to potential IPO candidates.
Key themes
The key themes in stakeholder feedback were fundamentally on:
- the provision of relevant, risk based and timely assurance and diligence; and
- enabling a balance between agility for companies and the confidence and information needs of investors.
Valued role: evolving expectations
Market participants recognised that reporting accountants, working with companies and boards through the IPO process, play a key role in ensuring:
- the provision of reliable financial information by issuers in their IPO prospectus; and
- that they are ready to act as listed companies and able to meet their obligations to inform the market on an ongoing basis.
Feedback confirmed that the scoping of the work of reporting accountants should be further tailored to reflect the specific circumstances of the company and transaction.
Actions for consideration
The following proposals take feedback into account and are aligned to the principles set out in the paper:
1. Deliver focused and risk-based IPO assurance and diligence that are relevant to the needs and risks of the company and sponsor:
- With reporting accountants committing to accelerating the progress towards increasingly risk focused and proportionate work, seeking to work with sponsors/nomads, directors, and other stakeholders to achieve this on a case-by-case basis.
- Evolving IPO diligence to be more relevant and valuable to users in terms of both content and timing.
2. Developing appropriate changes to current regulatory frameworks and guidance, including the alignment of the frameworks applicable for reporting at IPO and those subsequently for a listed group
ICAEW believes that the reporting requirements at IPO for a company should be as consistent as possible with subsequent reporting expectations as a listed company.
- As a next step, ICAEW will establish a working group to revisit its Guidance on Financial Position and Prospects Procedures’ (TECH 14/14CFF) with a view to publishing revised guidance that addresses developments since the original guidance was published, including Sustainability reporting, and Provision 29 of the UK Corporate Governance Code.
- Together with member firms, ICAEW will also continue to engage with regulators (the FCA, the LSE and the FRC) and other stakeholders with regard to relevant regulation as market practice will continue to evolve, and the longer-term alignment of information and reporting requirements in an IPO prospectus and those of the Annual Report and Accounts.
Next steps
ICAEW and its member firms will continue to engage with and seek support from stakeholders across the market to progress these proposals.
Understand the context
Published in July 2025, ICAEW's policy paper, The value of independent assurance in capital market transactions, explores the value of independent assurance in capital market transactions, with a particular focus on the role of reporting accountants during the IPO process.
Since its publication ICAEW has initiated a programme of stakeholder engagement to gather market opinion, assess the ongoing relevance of the reporting accountant’s work, and identify a forward-looking strategy for it.
Assurance and the work of reporting accountants provide a strong basis for providing trust and confidence at IPO. Agreeing a fit-for-purpose model that enables the UK’s equity capital markets to support listed companies will be a challenge and will require engagement across the ecosystem.
Further support
Influencing policy
Capital markets reform
ICAEW's Corporate Finance Faculty been playing an active role in shaping capital market reforms to make the UK a more attractive place for companies to list.
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Capital markets and investment
Resources from ICAEW's Corporate Finance Faculty on accessing global equity and debt, IPOs, infrastructure and project finance.
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