2. Published Accounts Flashcards
What are the requirements in terms of publishing annual accounts under the UK GAAP?
Under the Companies Act 2006, UK limited companies must produce accounts (financial statements) annually, and large companies must appoint an independent person to audit and report on them.
Who must the accounts of a company be sent to and where are they saved?
Once prepared, a copy of the accounts must be sent to the registrar of companies, who maintains a separate file for every company.
The registrar’s files may be inspected for a nominal fee, by any member of the public. This is why the statutory accounts are often referred to as published accounts.
What are statutory accounts?
Statutory accounts are the financial statements which limited companies are obliged by law to publish in a particular form.
Who has responsibility for publishing accounts? Who is responsible for providing approval?
The company’s directors must publish accounts which show a true and fair view (a phrase used in s393 Companies Act 2006) of the company’s assets, liabilities, financial position (balance sheet) and profit or loss (profit and loss account) for a financial year.
The board evidences its approval of the accounts by the signature of one director on the balance sheet. Once this has been done, and the auditors have completed heir report, the accounts are sent to shareholders and, in the case of a public company, are presented to the body of shareholders at a general meeting. When the shareholders have adopted the accounts, they are sent to the Registrar for filing.
When may the rules of the Companies Act 2006 be overridden in relation to published accounts?
Although the Companies Act 2006 lays down numerous rules on the information to be included in published accounts and the format of its presentation, any such rule may be overridden if compliance with it would prevent the accounts from showing a true and fair view.
When prepared under UK GAAP, what must the accounts include? (6)
1) A profit and loss account (equivalent to a statement of profit or loss)
2) A balance sheet as at the date to which the profit ad loss account is made up (equivalent to a statement of financial position)
3) A statement of changes in equity for the reporting period
4) A directors’ report, and a directors’ remuneration report in the case of a quoted company
5) An auditors’ report addressed to the members (not to the directors) of the company
6) A strategic report to inform members of the company and help them assess how the directors have performed their duty.
All we are concerned with in the ‘Accounting’ syllabus is the profit and loss account, the balance sheet and the statement of changes in equity.
What rules must UK listed companies comply with?
Listed companies must comply with the Listing Rules set out by the UK Listing Authority (part of the FCA). These require that listed companies should prepare their published accounts under international accounting standards. This is permitted by the Companies Act 2006.
Which terminology and format for financial statements do UK companies use?
The terminology and formats of international financial statements are different from the ones set out in the Companies Act 2006 and UK GAAP. In the UK:
1. Listed companies produce a statement of profit or loss and statement of financial position following international terminology and formats
2. Non-listed companies can choose either UK GAAP or IFRS Accounting Standards for their published accounts
