All private limited companies (“Limited” or Ltd”), public limited companies (“Plc”) and limited liability partnerships (“LLP”) are required to submit statutory accounts to Companies House at the end of their reporting period.
The standards in play now
Directors/Members are required to prepare statutory accounts in the UK and Republic of Ireland in accordance with Accounting Standards as set out by the Financial Reporting Council (FRC). There are currently five reporting standards in issue:
- FRS 100 – Application of Financial Reporting Requirements
- FRS 101 – Reduced Disclosure Framework
- FRS 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland
- FRS 103 – Insurance Contracts
- FRS 104 – Interim Financial Reporting
- FRS 105 – The Financial Reporting Standard applicable to the Micro-entities Regime
What Financial Reporting Standard is right for you?
The appropriate standard to follow will be dictated by the type of entity such as Ltd or Plc, the size of the entity or the nature of the business.
Our expert teams of Accountants and Advisors ensure that where a specific standard is applicable this is applied appropriately. Where there is an option as to which standard to apply our experts at Menzies would outline the pros and cons of each application and guide the directors/members through the decision process to the most appropriate outcome for the business.
What FRS do the majority of the UK use?
The majority of companies and LLPs in the UK and Republic of Ireland prepare their year-end accounts in line with FRS 102, however a sizeable number of companies prepare their statutory accounts in line with FRS 105.
FRS 102 contains a number of exemptions for entities who qualify as “Small Entities”. Section 1A of FRS 102 sets out the information that this required to be presented and disclosed by these Small Entities in their statutory accounts.
Section 1A results in much less information being presented in the statutory accounts of a Small Entity than would be required by a company or LLP which does not qualify for Small Entity exemptions.
What about small entities?
To qualify as a Small Entity the company or LLP must have at least two of the following:
- annual turnover of no more than £10.2 million;
- gross assets of no more than £5.1 million at the period end date;
- average number of employees is no more than 50.
Public companies (“Plc”) are not entitled to prepare Small Entity accounts. Some other specific exclusions also apply.
And micro-entities?
For entities which fall under the Micro-entites regime the Directors have the option to prepare statutory accounts under FRS 105 which further reduces the disclosure requirements placed on the statutory accounts.
FRS 105 applies to companies or LLP who have at least two of the following:
- annual turnover of no more than £632,000;
- gross assets of no more than £316,000 at the period end date;
- average number of employees is no more than 10.
Neither public companies (“Plc”) nor Limited Liability Partnerships (“LLPs”) are entitled to apply FRS 105. Some other specific exclusions also apply.
Contact Menzies Audit & Compliance team
To find out more about how we ensure our client’s compliance with the UK Financial Reporting Standards or to enquire about out services complete our contact from below.