Small company filing options 20 February 2017

Transcription

1 Small company filing options 20 February 2017 Download the slides to accompany the webinar from resources panel ICAEW 2017

2 Small company filing options 20 February 2017 ICAEW 2017

3 Introduction Eddy James Technical Manager, ICAEW

4 Today s presenters Julia Penny Technical Director, SWAT UK Dr Nigel Sleigh-Johnson Head of the Financial Reporting Faculty, ICAEW

5 Ask a question or download resources VAT Changes in 2015 Audio problems? Ensure your volume is turned on If you eperience poor sound quality you may benefit from refreshing your page Download resources here OR: FRF members: /frfwebinars Non-faculty members: /frfwebinar resources

6 Contents The new small companies regime Abridged accounts Filing options

7 Small company filing options THE NEW SMALL COMPANIES REGIME

8 Poll: Filing small company accounts your current practice ICAEW 2017

9 Background New UK GAAP The new micro-entities regime Implementing the new EU Accounting Directive

10 The new regulations The Companies, Partnership and Groups (Accounts and Reports) Regulations 2015 (SI ). The Limited Liability Partnerships, Partnerships and Groups (Accounts and Audit) Regulations Implement EU Accounting Directive and ensure equivalence for LLPs New criteria for qualifying as a small company Changes to info required in small company accounts Amended accounts formats Different filing obligations

11 The new financial reporting framework FRS 100 EU adopted IFRS FRS 101 Reduced disclosures FRS 102 FRS 105 Microentities FRS 102 FRS 102 Reduced disclosures FRS 102 for small entities

12 Section 1A of FRS 102 small entities Small entities regime Turnover 10.2m Balance sheet total 5.1m Employees 50 Optional Only need to prepare balance sheet and P&L Recognition and measurement requirements the same as FRS 102 Law mandates a limited number of disclosures Must give a true and fair view, so additional disclosures may be necessary Section 1A encourages some disclosures but can t mandate them

13 FRS 105 micro-entities Micro-entities regime Turnover 632,000 Balance sheet total 312,000 Employees 10 Optional Companies and LLPs only Condensed balance sheet and P&L Minimal disclosures as mandated by law but can voluntarily disclose more Presumed to give a true and fair view provided comply with legal requirements Recognition and measurement based on FRS 102 but amended to comply with the law and to allow other simplifications

14 Small company filing options ABRIDGED ACCOUNTS

15 Abridged accounts A new option for small companies Small companies may prepare an abridged balance sheet, abridged profit & loss account or both Still required to comply with the small company disclosures required by law Still must meet the requirement to give a true and fair view

16 Abridged balance sheet The abridged balance sheet includes only those line items : Preceded in the formats by letters A, B, C eg, current assets Preceded in the formats by Roman numerals I,II,III.. eg, debtors But not the items preceded in the formats by Arabic numbers 1,2,3 eg, trade debtors, other debtors etc.

17 Eample abridged balance sheet Fied Assets Intangible assets Tangible assets Current assets Stocks Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current assets Total assets less current liabilities

18 Eample abridged balance sheet (cont d) Capital and reserves Called up share capital Share premium account Profit and loss account

19 Abridged profit & loss account The abridged profit and loss account will combine certain line items under a single line item called gross profit or loss For companies following format 1, the items combined will comprise turnover, cost of sales, other operating income and gross profit or loss. For companies following format 2, the items combined will comprise turnover, changes in stocks of finished goods and in work in progress, own work capitalised, other operating income, raw materials & consumables and other eternal charges.

20 Eample abridged profit & loss account Format 1 Gross profit or loss Distribution costs Administrative epenses Operating profit Interest receivable Interest payable Profit before taation Ta on profit or loss Profit after ta

21 Abbreviated vs abridged accounts The new regime introduces what is sometimes referred to as a file what you prepare model The basic principle is that the accounts filed at Companies House are the same as those prepared for the members Previously a company had to prepare full accounts for its members It could then choose to abbreviate them for the public record A company can now choose to prepare abridged accounts for its members instead of full accounts They are not a filing option

22 Consent The decision to abridge all or part of the accounts must be agreed by all members Consent must be obtained each year and can only be made in respect of the preceding financial year A statement saying that consent has been given must be delivered to Companies House

23 Small company filing options FILING OPTIONS

24 Abbreviated accounts Abbreviated accounts

25 Filing options For accounting periods commencing from 1 January 2016 Abbreviated accounts have been abolished, but Filing eemptions for small and micro entities still eist in s444 CA 2006 There is no technical term for this reduced level of filing, but accounts filed in this way are often referred to as filleted accounts This is because you can fillet out the directors report and the profit and loss account

26 What should I file steps needed Small entities Start with the accounts prepared for members If desired, remove the profit & loss account, any notes specific to the P&L (eg, eceptional items) and any audit report If desired, remove the directors report Add required notes to the balance sheet regarding: Delivery according to the small companies regime Note to the balance sheet that the P&L has not been filed (if applicable) Summary of any audit opinion given if P&L not filed

27 What should I file steps needed Micro entities Start with the accounts prepared for members If desired, remove the profit & loss account and any audit report NB micros not required to prepare a directors report, therefore obviously no requirement to file Add required notes to the balance sheet regarding: Delivery according to the small companies regime Note to the balance sheet that the P&L has not been filed (if applicable) Summary of any audit opinion given if P&L not filed

28 Prepared vs filed Remember that you are starting your filleted accounts with what is prepared for members For a small entity this could be, for eample, any of: Abridged accounts under FRS 102 section 1A Unabridged accounts under FRS 102 section 1A Full FRS 102 (ie, without the disclosure and presentation eemptions in section 1A) What is filed is then just the balance sheet and notes as prepared for members, if full eemption is taken

29 Practical issues what to advise clients If the only objective is to file the minimum information at Companies House then: A small company would prepare abridged accounts (subject to permission from 100% of members each year) and file filleted accounts A micro entity would adopt the micro-regime in FRS 105 and file filleted accounts

30 Practical issues what to advise clients However, there are disadvantages to this minimalist approach including: Members may wish to have fuller information available Management may wish to have more detailed accounts It may be difficult/time-consuming to get all members to agree to abridged accounts Credit ratings may suffer as insufficient information available, especially with micro-entity accounts Banks may be less happy to lend If an audit is desired the micro-entity regime is not really suitable

31 Possible solutions Management and/or members could be provided with etra nonstatutory information Credit rating agencies could be provided with additional information, which may help Banks or other lenders could be provided with additional management information Detailed profit and loss account Detailed balance sheet Cash flow statement etc. if desired

32 Methods of filing Paper accounts must include a director s signature on the balance sheet Online filing no signature is included as the company s login details act as the authority for filing Remember that what is being filed is less than what the members get, but more than old abbreviated accounts You may want to ensure that any clients understand what is included in the filleted accounts and what is available only for members

33 Common misconceptions Abridged accounts are not a replacement for abbreviated accounts, they are accounts with reduced levels of detail that are prepared for members, then used as the basis for filing Abridged accounts (or indeed FRS 102 section 1A accounts) still need to give a true and fair view, unlike abbreviated accounts Therefore consideration must be given regarding any etra notes required to give a true and fair view Micro-entities are permitted to include etra disclosures if they wish, but are deemed to be true and fair without them Employee numbers is not a P&L note and therefore needs to be filed as part of the balance sheet notes You don t have to renumber notes, if you etract P&L notes from the filleted accounts, but you may if you wish

34 Poll: What accounts are you planning to prepare for members of small companies (ecluding micros) ICAEW 2017

35 Poll: What are the directors plans for filing the accounts (will always be based on what has been prepared) ICAEW 2017

36 Small company filing options QUESTIONS

37 Ask a question VAT Changes in 2015 How to ask a question Type a question into the question bo Press submit

38 Filing options under the new small companies regime - FAQs Download your copy from bit.ly/2jupajr

39 Financial reporting at your fingertips Download the faculty s free app for iphone, ipad and Android devices. Visit /frfapp for more information. You can also follow to keep up-to-date with the latest financial reporting developments and breaking faculty news 140 characters at a time.

40 Questions Julia Penny Technical Director, SWAT UK Dr Nigel Sleigh-Johnson Head of the Financial Reporting Faculty, ICAEW

41 Future webinars and events Webinars 27 April UK GAAP new and emerging issues 18 May UK GAAP the triennial review Visit /webinars for details of our upcoming webinars Events March to June ICAEW Practitioners' Essentials Roadshow 19 April The first triennial review of UK GAAP 26 April UK GAAP conference Visit events. for more details

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