small company reporting issues - 2020 group...7 •accounting policies adopted •fixed assets...
TRANSCRIPT
2
Highlights
Changes to the companies
regime
New FREDs and overview
S413 disclosures
Provisions The problem with goodwill
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• Accounting policies adopted
• Fixed assets revaluation table
• Fair valuation note
• Financial commitments, guarantees or contingencies not included in the balance sheet
• The amount of advances and credits granted to members of the administrative, managerial and supervisory bodies (with supporting information)
• Exceptional items
• Amounts due or payable after more than five years and entire debts covered by valuable security
• Average number of employees during the financial year
Mandatory disclosures
• Fixed asset note (in addition to the mandatory revaluation table)
• Name and registered office of the undertaking drawing up the consolidated financial statements of the smallest body of undertakings of which the undertaking forms part
• Nature and business purpose of arrangements not included in the balance sheet
• Nature and effect of post balance sheet events
• (Limited) related party transactions
Member state
options
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• Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
FRED 58
• Draft Amendments to FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland
FRED 59
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Prepare abridged accounts
File abridged BS
Prepare abridged accounts
File BS & P&L
Op
tio
n
Op
tion
Abridged accounts!
Q. What does a small company file if they prepare ‘proper’ accounts, not abridged accounts?
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….the Regulations require the consent of ALL members when it comes to drawing up the abridged accounts.
… and deliver to the Registrar a statement that all the members have consented to the abridgement .
• If an abridged P&L is filed, the audit report is filed with it
• If just the abridged balance sheet is filed, do not file the audit report but the directors make disclosures instead
What if a small
company is
audited?
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• the nature of the business purpose
• the financial impact of the
• small only discloses first item.
Off balance sheet
arrangements
• all companies disclose average number of employees
• small companies do not analyse by function
• directors rem disclosure unchanged
Employee numbers
• additional disclosure:
• any amounts written off
• any amounts waived
S413 Advances, credits &
guarantees
Directors’ report abolished for micros!
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• Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
FRED 58
• Draft Amendments to FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland
FRED 59
Small company audit exemption
Total assets £3.26m
Turnover £6.5m
Employees 50
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Overview and FRED 58,59 & 60
• Draft FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime
FRED 58
• Draft Amendments to FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland
FRED 59
• Draft Amendments to FRS 100
• Application of Financial Reporting Requirements and FRS 101 Reduced Disclosure Framework
FRED 60
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Mandatory
adoption
PC 1 January
2015
Early
adoption
PE 31 December
2012
FRS 102 for medium sized and large entities
•PC 1 January 2016
•Early adoption from 1 January 2015 permitted
NEW PROPOSALS
Implementation
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• Quoted companies IFRS
• Parents and subsidiaries in IFRS adopting groups
FRS 101 Reduced
Disclosure Framework
• Medium sized and large entities
• With reduce disclosure framework for groups
FRS 102 The Financial Reporting
Standard
• Small entities FRS 102 The Financial
Reporting Standard Section 1A disclosures
• Micro companies
FRS 105 Financial Reporting Standard for Micro Entities
(was FRSME)
Latest plans
S413 disclosures
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Micro company regime
• 30th Sept 2013 YE
• Accounts file after Dec 2013 When?
• Turnover is not more than £632,000
• Gross assets is not more than £316,000
• Employees does not exceed 10 Who?
• Abridged P&L and BS – no notes
• S413 and o/s obligations disclosure
• S444 accounts filed with Registrar What?
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s413 Disclosure requirements
• its amount,
• an indication of the interest rate,
• its main conditions, and
• any amounts repaid.
Credits and advances
• its main terms,
• the amount of the maximum liability that may be incurred by the company (or its subsidiary), and
• any amount paid and any liability incurred by the company (or its subsidiary) for the purpose of fulfilling the guarantee (including any loss incurred by reason of enforcement of the guarantee).
Guarantees
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ARD
31 July 2012
30 July 2012
29 July 2012
28 July 2012
etc…
Filing
30 April 2013
31 July 2013
31 Oct 2013
31 Jan 2014
etc…
S 442(4)
If the relevant accounting reference period is treated as shortened by virtue of a notice given by the company under section 392 (alteration of accounting reference date), the period [allowed for filing accounts] is— (a) that applicable in accordance with the above provisions [that is 9 months from the new ARD], or (b) three months from the date of the notice under that section, whichever last expires.
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S 392(4)
A notice under this section may not be given in respect of a previous accounting reference period if the period for filing accounts and reports for the financial year determined by reference to that accounting reference period has already expired.
ARD
31 July 2012
30 July 2012
29 July 2012
xxxxxxxxxx
Filing
30 April 2013
31 July 2013
xxxxxxxxx
xxxxxxxxx
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Notes:
However, I am not a lawyer, and it may well be argued that your client’s interpretation follows the letter of the law. So I cannot provide a definitive answer to your question. However, I am sure that the government never intended that a company could extend its year end indefinitely and therefore my belief is that, as chartered accountants, we should not be wasting our time with such schemes.
Vo
tin
g
Yes
No
Have you ever seen the extension applied
twice?
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Provisions
• an entity has a present obligation (legal or constructive) as a result of a past event,
• it is probable that a transfer of economic benefits will be required to settle the obligation and
• a reliable estimate can be made of the amount of the obligation.
FRS 12 – A provision
is recognised
when
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Example 1: An entity A has been operating for many years in a
country which has no environmental legislation. At 31 December
2011 it is virtually certain that a draft law will be enacted shortly
after the year-end which will require entities to clean-up land they
have already contaminated. Should A make provision for the
estimated cost of cleaning up past contamination?
Vo
tin
g
Yes
No
Should you provide?
32
• an entity has a present obligation (legal or constructive) as a result of a past event,
• it is probable that a transfer of economic benefits will be required to settle the obligation and
• a reliable estimate can be made of the amount of the obligation.
FRS 12 – A provision
is recognised
when
Example 2: An entity B has just begun operating in a country which
has no environmental legislation. However, B has published its
environmental policy in which it undertakes to clean up all
contamination that it causes. B has honoured this pledge in other
countries in the past. Should B make provision for the estimated
cost of cleaning up contamination in this country?
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Vo
tin
g
Yes
No
Should you provide?
• an entity has a present obligation (legal or constructive) as a result of a past event,
• it is probable that a transfer of economic benefits will be required to settle the obligation and
• a reliable estimate can be made of the amount of the obligation.
FRS 12 – A provision
is recognised
when
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Example 7A: Entity G owns a furnace. The lining of the furnace
needs to be replaced approximately every five years. Should a
provision be built up over the five year period to cover the cost of
the relining?
Example 7B: Entity H owns an aircraft. They are required by law to
overhaul the aircraft once every three years. Should a provision be
built up over the three year period to cover the cost of the
overhaul?
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• 20 years remains the appropriate UEL and there is sufficient evidence to support it
Scenario 1
• The 20 year life is unsupported and on closer inspection is unsupportable
Scenario 2
• There was sufficient information to support the 20 year life on acquisition but circumstances have changed since then and a shorter life is now thought to be more appropriate
Scenario 3
• There was sufficient information to support the 20 year life on acquisition and circumstances have not changed since then but the evidence to support the 20 year UEL is insufficient so the FRS 102, 5 year maximum applies
Scenario 4
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1. UEL unchanged
2. Correction
of error
3. New UEL
4. Transition
adj
UEL of Goodwill on transition
Vo
tin
g
S1 – no change
S2 – correction of error
S3 – Prospective change only
S4 – Change due to FRS 102
Which of these scenarios do you think is most
common in practice?