6. Annual or integrated report Flashcards
What Type of Accounts
Micro
b. Small
c. Medium
d. Full Accounts
e. Additional Disclosures for Listed Companies
What companies are considered micro
Turnover: not more than £632k
Balance Sheet total: no more than £316k
No of employees: up to 10
At least 2 of the criteria must be met
Excluded from micro-sized:
Regulated entities
Traded or listed companies
Companies purely for investment purposes
Credit/insurance/banking/e-money issuers
Charities
A parent company preparing group accounts
Filing Requirements
Profit & Loss Statement/Balance Sheet (abbreviated accounts)
Notes to the accounts
If they are audited, auditor’s report
Directors report - optional
What is considered to be a small company?
Small Companies Regime s.384
Eligibility / Exclusions
Individual accounts:
Turnover: up to £10.2m
Balance Sheet total: up to £5.1m
No of employees: up to 50 employees
If the company is consolidated group accounts:
Turnover: £10.2m net/£12.2m gross
Balance sheet: £5.1m net/£6.1m gross
No of employees: up to 50 employees
Excluded from being a small sized:
Public companies
Insurance/banking/regulated firms (financial services)
Members of an ineligible group (CA2006 s.384)
If any of the members are
A traded company
Doing a regulated activity under FSMA2000
Insurance/banking/regulated firms (financial services)
Filing Requirements
Balance Sheet – abridged
Notes to the accounts
Auditors report (if audited)
Group accounts (if part of a group)
Directors report – optional
Strategic Report - optional
What type of companies must prepare full accounts
Full accounts
Eligibility / Exclusions
Any company that doesn’t fit the criteria for micro, small or medium-sized must prepare full accounts
No size threshold
Filing Requirements
Directors report – yes
Strategic Report – yes
Profit and Loss Account – yes
Balance Sheet – yes
Notes to the accounts – yes
Auditor’s report – yes
Group accounts – if appropriate
Additional Disclosures for UK Listed Companies
What rules/legislation govern the additional disclosures required for listed companies?
Listing Rules and Disclosure and transparency rules
UK Corporate Governance Code
FRC
Market Abuse Regulations
DTR requirements for Management Report
DTR
Management Report
Overview of the business, principal risks and uncertainties, analysis of development and performance of the company, KPIs, significant events, use of financial instruments
DTR/Director responsibilities
Directors to give assurance that the financial statements give a true and fair view and have been prepared according to accounting standards
Should Annual Report be available for public
Audit report
Audit report must be made public
Listing rules
Prospectus variation
If a prospectus has been published since the last report, any variance of 10% or more between profit forecast and actual profit should be explained.
What is required in the AR by Listing Rules
Share incentives
Emoluments waived
Details of share issues
Placing involvement
Significant contracts
Waived dividends
Controlling shareholder agreements
What other items should be covered in AR?
Notifiable interests
Disclosed interests
Going concern statement
Purchase of own shares
Sale of treasury shares
UKCGC statement
What should be included in the Strategic report?
Contents
Mandatory report – CA2006 s414A
Purpose: shows how the directors performed their duties under CA2006 s.172
Contents
Strategy and business model of the company
Long term decisions
Building stakeholder relationships e.g. employees, human rights issues
Impact on the environment
Confirmation that the company will be able to meet its liabilities and continue operations
Principal risks and uncertainties facing the business
Anti-corruption and anti-bribery matters
What should by included in the Directors report?
Directors report
Mandatory report – CA2006 s415
Purpose: provide an overview of the company’s financial position at the end of each financial period
Contents:
Names of the directors
Dividends proposed
Statement provided to auditors
Political donations and expenditure in excess of £2,000
Research and development activities
Policy on employment of disabled persons (if there are more than 250 employees)
Engagement with stakeholders
What should be covered in the Auditor’s report
Auditors report
Purpose: to provide an independent opinion on whether the financial statements have been prepared in accordance with CA2006 and relevant financial reporting frameworks, whether the accounts provide a ‘true and fair view’ of the finances of the business.
Contents
Description of scope of audit and confirmation of auditing standards followed
Description of financial reporting framework
Description of the accounts that were audited and the accounting period
What should be in Rem report?
Directors remuneration report
Mandatory – CA2006 s420
Needs to presented to members at the AGM
Contents:
Includes annual statement from the Remuneration committee, annual remuneration implementation report and the company’s remuneration policy
Long term incentives schemes
If the director has waived or agreed to waive any emoluments
p.156 – factors to be taken into account in considering remuneration policies:
Simplicity
Clarity
Risk
Alignment to culture
Predictability
Proportionality
See book p.153-157 for full details
What should be provided in report for auditors
Report to audit committee
Auditors must provide a detailed report to the audit committee
Contents:
Scope and timing of audit
Methodology used
Materiality
Significant deficiencies in financial statements
Any non-compliance with laws/regs found during the audit
Any significant difficulties encountered during the course of the audit
Statement of going concern is part of this report
What should be covered in Audit, Nomination and Remuneration Committee Reports
Work of these committees is to be explained as part of the annual report
Contents
Disclosure of significant issues
Particular focus areas for audit
Actions taken to verify/monitor audit independence
Details of audit tender (if relevant)
How do the accounts need to be made available and for how long?
CA 2006 s 430
Quoted companies - accounts available on their website, throughout the year until the next year’s accounts are available i.e. the most up to date set of accounts must always be viewable
Listed companies – accounts must be publicly available for 10 years as soon as it is available to be published, access to website should be free
What are the filing requirements at Companies House?
CA2006 s442
Private companies – accounts available with the registrar within 9 months of the end of the FY
Public companies - accounts available with the registrar within 6 months of the end of the FY
Or, if the company is newly incorporated and has an accounting period of longer than 12 months, it should be within either 6 months (public) or 9 months (private) after the first anniversary of incorporation, or 3 months after the end of the accounting reference period.
Accounting reference period = the period that the financial statements cover
What are the filing requirements for FCA regulated companies?
Listed company – financial statements to be published within 4 months of year end (DTR)
A preliminary statement of annual results to be published as soon as practical after it has been approved by the directors.
Integrated reporting
Integrated reporting
What is integrated reporting?
IR provides a clear narrative of:
Corporate strategy
Key practical opportunities
Daily risks faced by management
Financial measures and metrics in place to support the narrative
Good integrated reporting allows directors to demonstrate
the business’s value creation strategy
Impact of anticipated economic events
Details of measures to grow and preserve value
Secure investment as it helps investors to get a better insight into the company and will make them more likely to invest
