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 • Most adopting FRS 102 • PC 1 January 2015 and large • With earlier adoption from 2012 entities Small • SI2015/980 & FRS 102 1A • PC 1 January 2016 and • With earlier adoption from PC 1 micro January 2015 • As part of a package with new CA entities 2006 regime
Small Total assets company regime £5.1m Turnover £10.2m Employees 50
Small companies (not micro) Earlier PC 1 Jan PC 1 Jan periods 2015 2016 FRSSE FRSSE 2008 2015 FRS 102 UK FRS GAAP 102
FRS 102 recognition and measurement Full FRS 102
FRS 102 presentation and disclosure Section 1A Small Entities
• FRS 102 1A disclosures are severely reduced! True • Encouraged disclosure – App D & fair • Abridged accounts • Extra disclosure view! • OCI? SOCIE? Cash flow? • Filleted accounts • Nightmare!!!!
Fillet! No P&L = No audit report Section 444(5) disclosures Filling
• No encouraged disclosures are included Illustrative • No encouraged FRS 102 presentation • No T&F disclosure Section 1A • Not abridged financial • Not filleted – yet! statements • If you don ’ t like them then micro might be an option
• 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 Encouraged set out in paragraph 3.9; • dividends declared and paid or payable disclosures 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.
• Deemed T&F view • No Directors’ report Illustrative FRS 105 • Can be filleted Micro • Does not prevent entity accountants from financial providing high quality statements accounts to management
Micro Total assets company regime £316,000 Turnover £632,000 Employees 10
FRS 102, Section 1A and related parties
• PC 1 Jan 2016 FRS 105 • No RP disclosure! • PC 1 Jan FRS 102 2016 • Very 1A restricted RP disclosure • PC 1 Jan FRS 102 2015 • Similar RP to (Full fat) old UK GAAP
Small • owners holding a entities and participating interest in Section 1A the small entity Disclose • companies in which the transactions small entity itself has a not under participating interest and normal • the small entity’s market directors (or equivalent conditions governing body) with
Small • the amount of such transactions entities • the nature of the related and party relationships and • other information about Section the transactions necessary 1A for an understanding of the financial position of the Disclose entity
Low High
FRS 102 for small companies Recognition and measurement
FRS 102 presentation and disclosure Section 1A Small Entities
FRS 102 recognition and measurement Full FRS 102
FRS 102 V FRSSE
• accounting policies; • cash flow statement (while small companies often do not include a cash flow FRS 102 • statement, there are considerable presentation differences which need explaining); • deferred tax; v • defined benefit pension schemes; • employee benefits; • fair value accounting; FRSSE • financial instruments; • fixed assets; • goodwill and intangible assets; • investment property; Overview • leases; • prior period adjustments; • revenue recognition; and • stock valuations.
• Timing differences plus: FRS 102 • Revaluation gains • FV adjustments on Deferred acquisition tax • Unremitted earnings
FRS 102 Holiday pay accrual
• 5 v 10 years • Only in exceptional FRS 102 circumstances where Goodwill the UEL cannot be and reliably estimated intangibles • No indefinite useful lives
• Revalue to FV FRS 102 • Remeasurement Investments properties through P&L
• Operating v Finance lease FRS • Lease 102 incentives to be Leases spread over length of lease
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