Archive for the ‘Audit’ Category

Accounts for limited companies

Posted on: November 30th, 2017 by Ian Thomas No Comments

Audits may be a thing of the past, but certain annual reports still apply.

If you’re a business owner, you may be familiar with the process of submitting your accounts for official inspection by an independent body. This is known as an audit.

You may also breathe a sigh of relief as most small businesses are no longer required to get their financial statements audited after the exemption thresholds were increased for financial years that begin on or after 1 January 2016. (more…)

FRS102: What does it all mean?

Posted on: April 5th, 2016 by Laura Farrow No Comments

Laura FarrowFRS102 isn’t something most businesses are going to get excited about. Even for those that have heard of it, many may not know what it means in practice.

In summary FRS102 is a set of rules that looks to standardise the accounting treatment that accountants use to represent the financial affairs of a company. The idea is that when looking at financial reporting across the spectrum of business, anyone looking will be comparing apples with apples because the treatment will be the same.

Small companies do have different disclosure requirements to large companies. There is also a class of companies called micro-entities – very small companies and they also have different rules.

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FRS102 and its impact on Corporate Finance Assignments

Posted on: January 28th, 2016 by Katherine Broadhurst No Comments

Katherine BroadhurstThere are a number of areas that FRS102 is changing in UK GAAP which will have an impact on transactions and other corporate finance work.

Asset Values

A key change in the new GAAP in the UK as a result of FRS102 is the valuation of many assets at Fair Value including investment properties, some financial instruments, biological assets and investments in associates and joint ventures. In addition, the movements in fair value in these items each year are taken to the profit and loss account, rather than the movements being accounted for through reserves.

With the movements being within the main profit and loss account, now called the Statement of Comprehensive Income, there will be new items which will impact on the profits of the business which previously have not.

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FRS102 and 105 – impact on farming

Posted on: January 13th, 2016 by Sarah Curzon 2 Comments

 

Sarah CurzonThe largest changes to accounting standards in a generation are now in force with the key new standard being FRS 102 and FRS 105 for micro entities.

The key areas where these impact on farm accounts are in the areas of inventory or stock and income recognition, including government grants and basic payments.

Inventory

Inventory in farming terms means livestock or crops grown for sale. Under FRS102, there is a specific agricultural inventory section, with a choice of carrying stock at either “fair value” or cost. The reported fair value will usually be market value less any realisation costs, although where the financial year end falls in the middle of a growing or rearing season, the fair value at year end could be the present value of the estimated future revenue. If the fair value treatment is chosen, this must be continued and it is not possible to revert to cost treatment at a later date. There are also detailed disclosures required under either treatment in FRS102.

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Accounting standard changes and what they will mean for you

Posted on: May 20th, 2015 by Laura Farrow No Comments
Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

March 2013 saw a ground-breaking event for UK financial reporting with the release of FRS 102, The Financial Reporting Standard applicable in the UK and Ireland.

This new standard replaces current UK accounting standards, for periods beginning from 1 January 2015, and so has very broad relevance.

This new standard has been described by some commentators as the biggest change to the accountancy profession for over 40 years.

Accounting treatment differs from current UK GAAP in many areas and therefore over the coming months there will be significant challenges for finance professionals as they attempt to identify the impact these changes will have on their financial statements.

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New role for Ellys at top accountancy firm

Posted on: August 18th, 2014 by Matthew Thomas No Comments
Matt Thomas, Director, MHA Broomfield Alexander

Matt Thomas, Director, MHA Broomfield Alexander

Wales’ leading independent accountancy firm MHA Broomfield Alexander has taken on a new graduate trainee in its Swansea office as part of its commitment to nurturing careers in the sector.

Ellys Morgan, who lives in the Mumbles, recently graduated from Bristol University with a degree in accountancy. During her time studying, she secured a work experience placement with MHA Broomfield Alexander and was offered a permanent trainee position after impressing directors in the audit department.

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Practice Note 14 on the audit of housing associations

Posted on: March 4th, 2014 by Laura Farrow No Comments
Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

On 30 January, the FRC issued Practice Note 14 The audit of housing associations in the United Kingdom (PN 14). The updated guidance reflects changes to the landscape in which the social housing sector operates. These stem from  reductions in grant funding and the availability of other sources of finance following the financial crisis and  governmental reforms to the welfare system.

As a result, many housing associations have diversified their activities and include more commercial activities such as care home or student accommodation. They are also taking different approaches to funding which often involve a move away from traditional bank loans towards more complex debt instruments. These changes give rise to a new and different range of audit risks. PN 14 provides guidance to auditors of housing associations on how to identify, assess and respond to these risks of material misstatement in the financial statements of housing associations.

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How will FRS102 affect your business?

Posted on: February 26th, 2014 by Laura Farrow No Comments
Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

If your company is medium or large and your financial statements are produced under UK accounting rules, then major changes are happening to your published financial statements. All the existing accounting rules have been re-written and re-issued as new standards with the detail being contained in FRS102. This means that the figures in your accounts must be recalculated, the earliest of which will be the balance sheet as at 1 January 2014 if you have a 31 December year end. If you have a 31 March year end then your balance sheet as at 1 April 2014 will need to be recalculated.

What does this mean for my business?

The changes are likely to affect your profits, how much tax you pay, how your business is valued, its credit rating, and also the outcome of contracts that you are currently negotiating, such as borrowing covenants, earn-outs and profit related bonuses.

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Micro-entities

Posted on: December 4th, 2013 by Laura Farrow No Comments
Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

The EU accounting directive included the ‘Micro-companies directive’, adopting the approach of ‘think small first’ with  exemptions from certain financial reporting requirements and simplified financial statements.

On 9 September 2013 the Department for Business, Innovation and Skills announced optional exemptions for micro-entities, in its response to the consultation on the implementation of this directive. As the legislation is still awaited, certain items may change from the current detail which includes:

  • A simplified balance sheet and profit and loss account
  • Much reduced disclosures in the notes to the financial statements
  • Continued exemption from the requirement to file a profit and loss account (although an abridged profit and loss account must be drawn up).

The changes will come into force once ratified by Parliament – probably by November 2013. They will apply to financial years ending on or after 30 September 2013 and to accounts for these financial years filed on, or after, the date on which  the changes come into force.

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Updated version of FRSSE

Posted on: November 24th, 2013 by Laura Farrow No Comments
Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

Laura Farrow, Senior Audit Manager, MHA Broomfield Alexander

On 31 July 2013, the FRC issued an updated version of the Financial Reporting Standard for Smaller Entities, to be known as the FRSSE (effective January 2015).

FRS 100 Application of Financial Reporting Requirements (issued in November 2012 as part for the suit of standards that form the new UK GAAP) contained a small number of amendments to the FRSSE. As a convenience to those preparing small company accounts, the FRC has issued this updated version of the FRSSE, to maintain it as a one-stop-shop. The updated FRSSE contains no new amendments to those previously issued.

The changes bring the FRSSE treatment of goodwill and intangible fixed assets and related party transaction disclosures into line with FRS102. The updated FRSSE also says that for new transactions not dealt with in the FRSSE and for which an   entity has no existing policy, it should have regard to FRS102 to establish current practice, rather than SSAPs, FRSs and UITF Abstracts.

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