Small company reporting issues Presented by John Selwood - - PowerPoint PPT Presentation

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Small company reporting issues Presented by John Selwood - - PowerPoint PPT Presentation

Apr 29, 2023 265 likes •862 views

Small company reporting issues Presented by John Selwood Highlights New small and micro regime Related party disclosures FRS 102 Recognition and measurement Preparing accounts under the new small/micro entities regime Medium sized

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Small company reporting issues

Presented by John Selwood

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Highlights

New small and micro regime Related party disclosures FRS 102 Recognition and measurement

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Preparing accounts under the new small/micro entities regime

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  • Most adopting FRS 102
  • PC 1 January 2015
  • With earlier adoption from 2012

Medium sized and large entities

  • SI2015/980 & FRS 102 1A
  • PC 1 January 2016
  • With earlier adoption from PC 1

January 2015

  • As part of a package with new CA

2006 regime

Small and micro entities

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Small company regime

Total assets £5.1m Turnover £10.2m Employees 50

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Earlier periods

FRSSE 2008 UK GAAP

PC 1 Jan 2015

FRSSE 2015 FRS 102

PC 1 Jan 2016

FRS 102

Small companies (not micro)

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FRS 102 recognition and measurement

Full FRS 102

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FRS 102 presentation and disclosure Section 1A Small Entities

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  • FRS 102 1A disclosures

are severely reduced!

  • Encouraged disclosure –

App D

  • Abridged accounts
  • Extra disclosure
  • OCI? SOCIE? Cash flow?
  • Filleted accounts
  • Nightmare!!!!

True & fair view!

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Filling

Fillet! No P&L = No audit report Section 444(5) disclosures

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  • No encouraged

disclosures are included

  • No encouraged

presentation

  • No T&F disclosure
  • Not abridged
  • Not filleted – yet!
  • If you don’t like them then

micro might be an option

Illustrative FRS 102 Section 1A financial statements

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  • a statement of compliance with this FRS

as set out in paragraph 3.3, adapted to refer to Section 1A;

  • a statement that it is a public benefit entity

as set out in paragraph PBE3.3A;

  • the disclosures relating to going concern

set out in paragraph 3.9;

  • dividends declared and paid or payable

during the period (for example, as set out in paragraph 6.5(b)); and

  • on first-time adoption of this FRS an

explanation of how the transition has affected its financial position and financial performance as set out in paragraph 35.13.

Encouraged disclosures

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  • Deemed T&F view
  • No Directors’ report
  • Can be filleted
  • Does not prevent

accountants from providing high quality accounts to management

Illustrative FRS 105 Micro entity financial statements

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Micro company regime

Total assets £316,000 Turnover £632,000 Employees 10

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FRS 102, Section 1A and related parties

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FRS 105

  • PC 1 Jan

2016

  • No RP

disclosure!

FRS 102 1A

  • PC 1 Jan

2016

  • Very

restricted RP disclosure

FRS 102 (Full fat)

  • PC 1 Jan

2015

  • Similar RP to
  • ld UK GAAP
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  • owners holding a

participating interest in the small entity

  • companies in which the

small entity itself has a participating interest and

  • the small entity’s

directors (or equivalent governing body)

Small entities and Section 1A Disclose transactions not under normal market conditions with

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  • the amount of such

transactions

  • the nature of the related

party relationships and

  • other information about

the transactions necessary for an understanding of the financial position of the entity

Small entities and Section 1A Disclose

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Low High

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FRS 102 for small companies

Recognition and measurement

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FRS 102 presentation and disclosure Section 1A Small Entities

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FRS 102 recognition and measurement

Full FRS 102

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FRS 102 V FRSSE

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  • accounting policies;
  • cash flow statement (while small companies often do

not include a cash flow

  • statement, there are considerable presentation

differences which need explaining);

  • deferred tax;
  • defined benefit pension schemes;
  • employee benefits;
  • fair value accounting;
  • financial instruments;
  • fixed assets;
  • goodwill and intangible assets;
  • investment property;
  • leases;
  • prior period adjustments;
  • revenue recognition; and
  • stock valuations.

FRS 102 v FRSSE Overview

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  • Timing differences

plus:

  • Revaluation gains
  • FV adjustments on

acquisition

  • Unremitted

earnings

FRS 102 Deferred tax

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FRS 102 Holiday pay accrual

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  • 5 v 10 years
  • Only in exceptional

circumstances where the UEL cannot be reliably estimated

  • No indefinite useful

lives

FRS 102 Goodwill and intangibles

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  • Revalue to FV
  • Remeasurement

through P&L

FRS 102 Investments properties

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  • Operating v

Finance lease

  • Lease

incentives to be spread over length of lease

FRS 102 Leases

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