New financial reporting rules come closer

The government has published its plans for implementing a new EU Accounting Directive consolidating legislation on financial reporting.

In a response to a consultation carried out last year, published on 27 January, the Department for Business, Innovation & Skills said it intended to introduce measures, including:

  • adopting the maximum thresholds available under the directive to decide the size of small companies, enabling 11,000 medium-sized companies to be re-categorised and access a less complex small companies regime. Mandatory increases in the thresholds for medium-sized and large companies will also be applied
  • allowing small companies to prepare an abbreviated balance sheet and abbreviated profit and loss account, if approved by all shareholders
  • giving companies the opportunity to use alternative layouts when preparing their profit and loss account and the balance sheet, provided that the information supplied is at least the equivalent of that required in standard formats
  • removing the requirement for micro-entity companies to prepare a directors report.

To be defined as a small company under the maximum thresholds, the business must not exceed two out of three criteria of a balance sheet total of £5.1 million, turnover of £10.2 million and an average number of employees of 50.

The government intends to introduce legislation to implement the directive early in 2015 and companies will be required to apply the new financial reporting framework for financial years starting on or after 1 January 2016.

However, the regulations will allow companies to voluntarily adopt the framework earlier if they wish.

Link: Further information