Reference no: EM132966655

KCB Group Plc., a company quoted on the Nairobi Securities Exchange (NSE), deals in banking and financial services. It has an authorized share capital of Kshs 4.5 billion divided into 4.5 billion ordinary shares of Kshs 1.00 each. The company has been operating for many years. It's issued share capital was Kshs 3.066 billion divided into 3.066 billion ordinary shares of Kshs 1.00 each as at 31st March 2020. In order to expand its operations, the shareholders authorized the issue of an extra 500 million shares at an offer of Kshs 1.5 per share at the annual general meeting of the company held virtually on 3rd July 2020. The shares of the company are currently trading at Kshs 34.75 per share.

The directors of the company have prepared a detailed prospectus showing the historical performance of the company for the last five years up to 31st March 2020. They have also made detailed projections based on the economic outlook for the six months ending 30th September 2020 in which they project an increase in demand for their services. This is expected to increase the turnover by 15%. The group also projects to make savings on operations costs through prudent management of its resources which would see projected increase by Kshs 50 billion in the six months to 30th September 2020. Your audit firm, PWC, Certified Public Accountants have been appointed as the reporting accountants of the group for the purpose of examining and expressing an opinion on the prospective financial information issued by the group.

Required:

(a) Explain the term prospective financial information.

(b) Summarize the procedures PWC should carry out in order to be in a position to report on the forecast.