Small Companies
Paul McMahonAccounts & Returns
The Companies Act 2017 introduces a new financial reporting regime tailored for small companies, offering flexibility in reporting standards. Companies qualifying as small may adopt this regime for financial years commencing after January 1, 2017. However, application to earlier periods may be limited due to the legislation’s commencement date.
The small companies regime mandates compliance with the principle of presenting a true and fair view of the company’s financial status, allowing for necessary disclosures or deviations from standards. Financial statements must adhere to a statutory format, with reduced notes and disclosures, omitting requirements for a cash flow statement and statement of changes in equity.
In instances where compliance with statutory requirements does not suffice for a true and fair view, additional information must be provided. Companies must disclose any departures from statutory provisions and ensure consistency with applicable accounting standards, identifying material departures and their effects.
Requirements include balance sheets, profit and loss accounts, and other statements, alongside comparative information from the previous year. Certain modifications and exemptions apply, affecting disclosure obligations for various items including related undertakings, staff details, and auditor’s remuneration.
Disclosure requirements extend to assets, shares, appropriations of profit, loans, and obligations, with detailed reporting on liabilities, securities, and retirement benefits. The regime also entails disclosures regarding directors, related parties, and transactions, with a narrower definition of related parties compared to larger companies.
Overall, the small companies regime offers tailored financial reporting standards suited to the needs and scale of small businesses, providing flexibility while ensuring transparency and accountability in financial disclosures.
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