All change for company accounts by Steve Collings

It should come as no surprise to practitioners and company directors that the landscape for financial reporting is currently going through a significant change.


The introduction of a new financial reporting regime, based on IFRS for SMEs, has been published since March 2013.  For unlisted companies which are not part of the small companies’ regime, the transition across to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland is mandatory for accounting periods starting on or after 1 January 2015 (earlier adoption is permissible).  This means that many companies in the UK and Republic of Ireland have either undergone, or are about to undergo, a transition to the new UK GAAP.

Companies at the smaller end of the scale (ie those which have previously reported under the FRSSE) will be moved under the scope of FRS 102 for accounting periods starting on or after 1 January 2016 (although earlier adoption is permissible).  Small companies will have to comply with the presentation and disclosure requirements of Section 1A Small Entities in FRS 102; although recognition and measurement of amounts in the financial statements are based on full FRS 102.  The FRSSE (effective January 2015) is the last version of the FRSSE and is withdrawn in its entirety for accounting periods starting on or after 1 January 2016.

Micro-entities, being the smallest companies in the UK with turnover of not more than £632,000, a balance sheet total of not more than £316,000 and not more than an average number of 10 employees, can report under FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime, which is also mandatory for accounting periods starting on or after 1 January 2016, although as with FRS 102, earlier adoption is permissible.  It is to be emphasised that FRS 105 is optional, and if a micro-entity chooses not to report under FRS 105, then it can report under a more comprehensive FRS if it wishes (such as FRS 102).

New disclosure requirements

Not only has UK GAAP been subject to significant levels of change, but company law has also seen a major revision.  The EU issued their Accounting Directive (‘the Directive’) in June 2013 and Member States were required to transpose the requirements of the Directive into law by July 2015.  In the UK, this completed in the first quarter of 2015 and the revised Companies Act 2006 received Royal Assent on 26 March 2015, becoming effective on 6 April 2015.

The revisions to the Companies Act 2006 (by virtue of SI 2015/980) primarily affects small and micro-entities and the disclosures which they are required to make in their financial statements.  The Directive seeks to reduce the burdens placed on companies at the smaller end of the scale by limiting the disclosures that are required by law.  The revised Act becomes mandatory for accounting periods starting on or after 1 January 2016.  A notable change (as well as the reduced disclosure requirements) is the increase in size thresholds which determine the size of a company.  The government has incorporated an early-adoption clause into the revised Act, meaning that companies which would have been classed as medium-sized under the old thresholds, but which would now be classed as small under the new thresholds, can apply the revised Act to financial periods starting on or after 1 January 2015, but before 1 January 2016, if the directors so wish.  The government anticipates that some 11,000 businesses will be able to benefit from applying the small companies’ regime in their financial statements.


UK GAAP and company law have both seen significant amounts of change. The effects of these changes cannot be under-estimated and practitioners and company directors must have a sound understanding of the new accounting and disclosure requirements to ensure financial statements are prepared in accordance with legislative and GAAP requirements to avoid any potential negligence claims or challenges from regulatory bodies, such as HM Revenue and Customs or professional bodies.

For a comprehensive overview of the new reporting regimes in the UK and Republic of Ireland, see Steve Collings’ new book UK Financial Statements: Presentation and Disclosure Requirements at:


Steve Collings pic

Steve Collings is the audit and technical director at Leavitt Walmsley Associates Ltd. He is also a member of the UK GAAP Technical Advisory Group at the Financial Reporting Council. Steve regularly lectures on company reporting issues and the book benefits from his wide range of experience in dealing with clients in this area. He is also the author of Accounts and Audit of Limited Liability

Partnerships, Fourth Edition, Small Company Financial Reporting and the co-author of Financial Reporting for Unlisted Companies in the UK and the Republic of Ireland (Bloomsbury Professional).



Written by Ellie MacKenzie

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