Accounting regulations in the UK
Accounting system
Standards
The financial statements of national and foreign public companies must be prepared in accordance with IFRS standards;
(except for those foreign companies whose standards in the country of origin are equivalent, according to the EU, to IFRS standards).
Read also: Personal Income Tax and Consumption Taxes in the United Kingdom
There are five possible financial frameworks for SMEs, the most common being FRS 102 applicable in the UK and the Republic of Ireland.
This framework is based on IFRS for SMEs with some modifications.
- Accounting regulation entities
- Financial Reporting Council
- Accounting legislation
The accounting profession in the UK is regulated by the Companies Act 2006 and the Third Country Auditors Regulation 2007.
Divergences between national and international standards (IAS/IFRS)IFRS standards are mandatory for all national and foreign public companies;
(except those foreign companies whose standards in the country of origin are equivalent, according to the EU, to IFRS standards).
There are five financial reporting frameworks for SMEs, all based to some extent on IFRS standards.
- Accounting news
- Accounting Web
- Accountancy Live
Read also: Taxation in the United Kingdom
Practices
Fiscal year; The corporate fiscal year begins on April 1. A company’s fiscal year normally lasts 12 months and companies can prepare their accounts on any date.
The accounting fiscal period of a company is generally 12 months, but special rules apply when the accounting covers a period of more than twelve months.
For the periods that cover the beginning of the fiscal year, the taxable income is taxed according to the prevailing rates in the two exercises that coincide with the accounting year.
Account structure
British companies must have books where the operations of the company are recorded and must present an annual accounting that includes an annual report, a profit and loss account;
a balance sheet, a table of financial flows, an appendix, the opinion of the auditors, a statement of recorded profits and losses;
a comparison between movements in shareholders’ interests and a note on results based on historical cost. Publication obligations Financial statements must be prepared annually.
Small businesses that meet two of the following three requirements: annual turnover less than GBP 10.1 million; total balance sheet less than GBP 5.1 million; headcount less than 50 employees;
can submit a reduced balance sheet and a special report of audit.
Medium-sized companies (those that meet two of the following three requirements: annual turnover less than GBP 36 million; total balance sheet less than GBP 18 million; headcount less than 250 employees)
may be limited to presenting a profit and loss account, a list of other income comprehensive reports, a financial statement and a statement of changes in equity;
a management report, a strategic report, an audit report and annexes to the accounts.
Read also: Everything There Is To Know About Credit
The profession
The accountants
- Only public accountants and certified accountants are authorized by the Accounting Commission to perform duties.
- Professional entities
- Institute of Chartered Accountants in England and Wales
- Association of Chartered Accountants
- Chartered Institute of Public Finance Institute of Scottish Chartered Accountants
- Association of Chartered Accountants Institute of Financial Accounting
