Recognising that professional accountants in business play an important role in helping their organisations deliver long-term value, the International Federation of Accountants (IFAC) Professional Accountants in Business (PAIB) Committee has released new guidance on the use of discounted cash flow analysis and net present value in evaluating investments. The guidance, entitled Project Appraisal Using Discounted Cash Flow, was released as part of the PAIB Committee’s new program to develop international good practice guidance on financial and management accounting topics. 
 
The paper deals with eight key principles that are widely accepted as good practice in project appraisal using discounted cash flow (DCF). These principles and their application are explained, which enables the DCF outcome to be used to support decisions for managerial purposes. Where relevant, some of the principles also have public and non-for-profit sector applications. Where the DCF and net present value are used for financial reporting purposes, members should refer to the relevant accounting standards for the requirements.  
 
'It is extremely pleasing that Chartered Accountants in business have access to best practice guidance in the highly complex and subjective area of investment decision making,' said Manager of Members in Business, Karen Dowsett.  
 
'The guidance will assist members in understanding the importance of recording value creation, especially considering the long-term benefits to their organisation.'  
 
 
Relevant links:

• International Federation of Accountants: Project Appraisal Using Discounted Cash Flow