Accounting Principals Flashcards
What is a statutory Account?
Demonstrates annual financial information in a generic format, in line with GAAP or IFR, to HMRC and shareholders - purely financial info - Compulsory. Must include a balance sheet and profit and loss statemetn
What is a management account?
Management account are non-compulsory financial reports held with in a business which incorporate profit and loss reports and a balance sheet.
What is a profit and loss statement?
is a summary of the business expenditure and income transations over a specified time
What is a cashflow statement?
A cash flow demonstrates where income and expediture over a specified time period. Three main parts: 1. Operations Cashflow 2. Investment Cashflow 3. Cashflow from financing.
What is a balance sheet?
A balance sheet is a statement of a businesses financial position at a point in time i.e. end of year/ quaterly updates. Includes assetts and liabilities.
What is your annual financial statement? Can you tell me something from it?
It is a annual financial statement whcih demonstrates financial performance, corporate responsibility, other KPIs,
What is a PLC?
A public liability company is a company that designates shares of stock to the general public. To be a PLC the company must have a minimum shar of £50K capital.
What are the international Financial Reporting standards?
Consistent international standards for finanicial statmenet reporting covered, adopted by 144 coutnries. Savills PLC use IFRS.
What are GAAP (general accepted accounting principles?)
More locally used General accepeted accounting principles - widely in the uk standard for financial statement reporting.
What is the role of the auditor? How often are Savills audited? What size company requires auditing?
half-year and full year. EY half-yearly review (high level) and annual audit.
What are included in the set of accounts for a PLC?
Chairman’s statement
auditor’s report (chartered account)
Financials (including P&L accounts admd balance sheets.
What are the key deifferences between IFRS & GAAP?
GAAP is rule based and IFRS is principal based. Also the way that leases are viewed as liabilities or assets. Leases must be included on balance sheets (excl. clauses 6 months or less) in IFRS.
How do you hold client’s money?
I do not typically but firms must keep client money safe and have appropriate accounting control.
I would refer to the RICS Professional Standard for Client Money Handling’ 1st Edition 2019. There are 6 main areas of good practice:
A few examples that i must comply with are:
- client monies must be held in a separat account
- the account name must have the word client in it
- the client must be able to access the accound on demand.
What must you complete whilst starting a new firm?
There are statutory and RICS compliance.
RICS compliance:
- PII
- inform the RICS
- appoint a responsible principal person
- Set up CHP adn get RICS approval
- Appoint a Complaints handling officer.
Statutory compliance:
HMRC registration
Bribery Act complaince
DDA complaince
Financial Service complaicen
AML compliance
GDPR and data Protection Act Compliance
Employment law complaince
The anti modern slavery act.
What do you need to do when closing a practice?
Insurance run off should have allowed for 6 years after the firm has close.
Inform the RICS
Inform clients
Inform insurers
retain a copy of the client files and records for a minimum 6 years