1.6 National & company law

Question 1

What specific accounting rules does the CA 2006 set out?

Answer 1

Accounts must be prepared under either:

• IFRS as adopted for use in the EU
• under UK accounting standards and more detailed legal requirements.

Question 2

Which standard must UK listed and AIM companies follow in their group accounts?

Answer 2

IFRS

Question 3

What arguments have been made against the incorporation of EU legislation into CA 2006?

Answer 3

CA 2006 has simplified certain aspects while making others complex and confusing, making it harder for smaller companies in particular to do business.

Question 4

What key factors about a company affect how it is regulated by the CA 2006? (5 things)

Answer 4

• traded vs non-traded
• quoted vs unquoted
• public vs private
• micro, small, medium or large
• public interest vs non public interest entities.

Question 5

What are the aims of the statutory requirements set out in the CA 2006?

Answer 5

1. Strengthening & simplifying regulation by reforming provisions for private & public cos
2. Providing rules around the formation & running of a company
3. Improving communication with shareholders & management by codifying common law principles such as those relating to director’s duties
4. Enhancing a long-term investment culture
5. Protecting the interest of consumers by increasing a company’s disclosure requirements
6. Affording flexibility for the future

Question 6

What are the current UK company size limits which then determine which accounting rules the company can follow?

Answer 6

Category Revenue/Tunover Max Net Asset (B/S) Max av. of e/ees
Micro less than £632k less than £316k less than 10
Small less than £10.2m less than £5.1m less than 50
Medium less than 36.0m less than £18.0m less than 250

Question 7

Which companies cannot follow the simpler rules?

Answer 7

Insurance or banking companies