Module 7 Financial Reporting Regulation and the Conceptual Framework Flashcards
The financial reporting regulation in the UK consists of:
Legislation - the companies Act 2006
Financial reporting standards
What is the Companies Act 2006?
All UK registered companies must comply with the provisions.
CA 2006 provides guidance on financial reporting administration and financial statement format, and has a number of disclosure requirements for financial statements.
In the UK what standard must financial statements be prepared in accordance with?
IFRS or UK financial Reporting standards
Which companies must apply IFRS Accounting Standards?
Listed Companies on London Stock Exchange
Which companies can choose to follow IFRS or UK financial Reporting standards?
Non-Listed companies
What is the difference between a Public company and a Private company?
Public can offer shares to the public whereas a private company cannot
Under the CA 2006 companies MUST?
- Keep adequate accounting records
- Determine an appropriate accounting reference date
- Prepare financial statements
- Prepare directors and strategic reports
- File financial statements within a set time period
CA 2006 requires directors to keep adequate accounting records that are sufficient to:
- Show and explain the company’s transactions
- Disclose the financial position of the company
- any accounts required to be prepared by the company comply with the requirements of the CA 2006
Accounting records must, in particular contain:
- Details of all cash receipts and payments
- A record of the assets and liabilities of the company
How long should a private company preserve records for?
3 years from the date which they are made
How long should a public company preserve records for?
6 years from the date on which they are made
For all newly formed companies what is the default position for when financial statements need to be prepared?
The last day of the month 1 year after incorporation
E.g. incorporating 10th October 2027, financial statements 31st October 2028
If a company chooses a different Accounting reference data what are the rules under CA 2006?
The company’s first accounting reference period must be more than 6 months, BUT no longer than 18 months.
What is the information gap?
The difference in knowledge of the company’s affairs between the directors and the shareholders
Under CA 2006 what must the directors report state?
- The names of the persons who, at any time during the financial year, were directors of the company
- The amount (if any) that the directors recommend should be paid by way of dividend
