You may have heard that there is a new accounting standard in place which is effective for all accounting periods which commenced on or after 1 January 2015.
The new accounting standard
The standard, FRS 102, replaces all existing UK accounting standards, pronouncements, and other rules and as such will become the single point of reference and guidance for the preparation of financial statements in the UK.
Small companies turnover less than £10.2m As a small company (typically turnover less than £10.2m), you will be eligible to take advantage of Section 1A of FRS 102 Small Entities, which sets out the presentation and disclosure requirements for small companies in order for them to comply with the Companies Act 2006. However, the accounting principles and policies of FRS 102 will continue to apply.
At this stage, there is some uncertainty within the accounting industry as to exactly what disclosure will be required under Section 1A and in particular in respect of related party transactions whichinclude directors’ and shareholders’ remuneration and dividends.
Abbreviated accounts, as they currently exist, will not be available to be filed with Companies House being replaced instead by abridged accounts, meaning more information will be publicly available, including a profit and loss account.
Due to the uncertainty regarding disclosures under FRS 102, we would propose to prepare your accounts in accordance with the Financial Reporting Standard for Small Entities (“FRSSE”) for the next accounting period. The FRSSE continues to apply the accounting rules which were relevant prior to the introduction of FRS 102 and has the benefit of a disclosure regime which still permits the use of abbreviated accounts.