You are very welcome to this, the second instalment, of Query Of The Week. Each week our technical team respond to a massive number of client queries. The purpose of Query Of The Week is to share with you the most common questions that keep coming up time and time again.
In this Query Of The Week, John Murphy explains the required disclosures in relation to FRS 105 for Abridged Accounts.
Reduced Disclosures for Financial Statements and Abridged Accounts Under FRS 105
If this Query Of The Week was of interest to you, you will also be interested in our Reduced Disclosures for Financial Statements and Abridged Accounts Under FRS 105 online CPD course.
Full details for this online CPD course can be found here.
| CPD Allocation | 1 Hour |
| Fee | €25 (or 1 CPD Club points) |
| Presenter | John Murphy – OmniPro |
| Category | Financial Reporting |
Query Of The Week – Video Transcript
If when preparing a set of FRS 105 financial statements, you have included additional disclosures on top of what’s the minimum disclosures required by the Micro Companies Regime in FRS 105, if those financial statements are subsequently abridged do you have to include those in the abridged financial statements?
To answer that question we must look at section 352 and 353 of the Companies Act 2014 as amended by section 52 of Companies Accounting Act 2017.
In this case, the abridged accounts should include the financial statements, less the P & L, and then the notes that are required by the Micro Companies Regime. Section 353 says that all notes from section 305, which deals with directors’ remuneration, to section 321 which deals with accounting policies must be included.
The only notes applicable for the Micro Company’s Regime is loans given to the director’s for their benefit, guarantees given for the benefit of directors or connected persons, the accounting policies and where you’re holding your own share or where you’re holding your own shares as maybe treasury shares. They are the only three that are required.
Therefore, the abridged accounts would only need those and then on top of that any disclosures specifically required by the Micro Company Regime.
If the exemption to show the P & L results on the face of the P & L has been taken, they need to be included in the notes to the abridged financial statements.
It also refers to section 291 where by notes which where put in need to be included in order to show a true and fair view. The Companies Act states that the FRS 105 Micro Companies Regime are presumed to show a true and fair view.
When putting additional notes in FRS 105 accounts they can be taken out if the accounts are abridged All that is needed is the minimum requirements under the Micro Companies Regime. That will be the financial statements, less the P & L, and all the other notes in relation to the Micro Companies Regime. Which is the accounting policies, the loans to or guarantees given for the benefit of the directors, contingency guarantees, holding of own shares and apparent reversals of impairments of prior period adjustments and the movement on P & L reserves notes.
There is an option rather than putting the additional disclosures in the notes to the accounts you can put the additional disclosures and supplementary information at the back of the financial statements so they can be taken out when the accounts are abridged.