P2 - 6. Annual or Integrated report

Question 1

What are the companies’ requirements of all companies in terms of accounts and reporting?

Answer 1

To keep accounting records (CA2006s. 386)

Prepare and publish financial statements in respect of each financial period

Question 2

When is the default, first accounting reference date set?

Answer 2

The end of the month of the anniversary of its incorporation.

Question 3

Which part of the annual report is the cosec responsible for overseeing?

Answer 3

The front end: the chair’s statement, strategic and directors’ reports, remuneration report, corporate
governance report and the reports of the various committees

Question 4

What are the divisions of company size?

Answer 4

• micro-entities;
• small companies;
• medium-sized companies;
• default disclosures for unlisted companies; and
• additional disclosures for listed companies

Question 5

Eligibility of a micro company?

Answer 5

Threshold not to exceed:
Turnover - £632,000
Balance sheet total - £316,000
No. of employees – 10

Question 6

Which companies are excluded from being treated as micro-sized?

Answer 6

• a company excluded from the small companies’ regime by virtue of CA2006 s. 384;
• an investment undertaking;
• a financial holding undertaking;
• a credit or insurance institution; or
• a charity (CA2006 s. 384B(1)).

Question 7

Which documents must be filed for micro companies?

Answer 7

Balance Sheet – abridged
Auditors report

Directors report – optional

Profit and loss account - abridged optional

Question 8

Eligibility of a small company?

Answer 8

Individual accounts threshold not to exceed:
Turnover - £10.2m
Balance sheet total - £5.1m
No. of employees – 50

Question 9

Eligibility of a small company?

Answer 9

Group accounts threshold not to exceed:
Turnover - £10.2m or £12.2m gross
Balance sheet total - £5.1m or £6.1m gross
No. of employees – 50

Question 10

Which companies are excluded from being treated as small-sized if at any time during the financial year?

Answer 10

• a public company;
• an authorised insurance company, banking company, e-money issuer, MiFID investment firm or a UCITS
  management company;
• a company that carries out insurance market activities; or
• a member of an ineligible group (CA2006 s. 384(1)).

Question 11

Filing requirements for a small company?

Answer 11

Auditor’s report

Balance sheet – abridged

Directors’ report – optional
Strategic report – optional
Profit & loss account – abridged optional
Group accounts – optional

Question 12

Eligibility of a medium-sized company?

Answer 12

Threshold – individual
Turnover - £36m
Balance sheet total - £18m
No. of employees – 50

Question 13

Which companies are excluded from being treated as medium-sized company?

Answer 13

• a public company;
• authorised under FSMA2000 Part 4 to carry on a regulated activity or carry on insurance market activities;
• a company that carries out insurance market activities;
• an e-money issuer; or
• a member of an ineligible group (CA2006 s. 467(1)).

Question 14

Filing requirements for a medium-sized company?

Answer 14

Directors report
Strategic report – abridged
Profit & Loss account - abirdged
Balance sheet – abridged
Group accounts – if approrpate
Auditors report

Question 15

What elements to full accounts comprise of?

Answer 15

Directors report
Strategic report
Profit & loss account
Balance sheet
Group accounts – if appropriate
Auditors report

Question 16

What are the additional accounting disclosure requirements set out in the Listing Rules that the annual report of a listed company must include?

Answer 16

• A corporate governance report.
• An annual report on the remuneration of its directors. A remuneration policy must be approved by shareholders at least once every three years and this must be included as needed when it is being proposed to shareholders.
• A statement on the viability of the company over the longer term. This is in addition to the going concern statement.
• An explanation of the company’s business model.

Question 17

Which reports are referred to as the front end of accounts?

Answer 17

The strategic report
Directors’ report
Directors’ remuneration report
Corporate governance statements

Question 18

What is the purpose of the statutory audit?

Answer 18

Provide an independent opinion to the members on the truth and fairness of the financial accounts and some sections of the narrative reports,

Confirm if financial accounts have been properly prepared in accordance with the Act

Confirm if proper accounting records have/have not been kept

Question 19

Which companies are exempt from audit?

Answer 19

• a small company (CA2006 s. 477);
• as a dormant company (CA2006 s. 480); or
• as a qualifying subsidiary (CA2006 s. 479A).

Question 20

What must the auditors report include?

Answer 20

• the identity of the company the subject of the audit;
• a description of the annual accounts being audited (including the period covered by those accounts);
• a description of the financial reporting framework used in the preparation of the accounts;
• a description of the scope of the audit and confirmation of the auditing standards followed; and
• a clear statement of whether in the opinion of the auditor, the accounts:
  – give a true and fair view;
  – have been properly prepared in accordance with the relevant financial reporting framework; and
  – have been prepared in accordance with the requirements of the Act (and, where applicable, Article 4 of the IAS Regulation) (CA2006 s. 495).

Question 20

What must the auditors report be?

Answer 20

• be either unqualified or qualified;
• include a reference to any matters to which the auditor wishes to draw attention by way of emphasis without qualifying the report;
• include a statement on any material uncertainty relating to events that may cast significant doubt about the
  company’s ability to continue to adopt the going concern basis of accounting; and
• state the auditor’s place of establishment.

Question 21

A listed company has additional disclosure requirements, where can these be found?

Answer 21

Listing Rules and Disclosure and Transparency Rules

Question 21

What are the differences between listed and quoted companies?

Answer 21

A listed company is one listed in the Official List maintain by the UKLA.

A quoted company is a company whose equity share capital has been listed in the UK, officially listed in an EEA state or admitted to dealing on the New York Stock Exchange or Nasdaq

Question 22

Do micro and small companies need to file their profit and loss account with the Registrar?

Answer 22

No

Question 23

Which legislation governs the content of corporate governance statements for listed companies?

Answer 23

Companies Act 2006, Listing Rules, Disclosure and Transparency Rules, UK Corporate Governance Code