The Administrative Amendments for Smaller Companies Must Not Compromise True and Fair View of Accountants Says ACCA
The Department for BIS (Business Innovations & Skills) asked for government consultation on United Kingdom (UK) application of the European Union (EU) accounting instruction to which Association of Chartered Certified Accountants (ACCA) has given its response. The consultation was regarding the available choices in order to decrease the managerial load on the smaller businesses (businesses with > ten million pounds of annual revenue). The queries of BIS were answered by ACCA about these choices, which will be available when the directive of European Union must be applied in United Kingdom from the year 2016.
ACCA’s head of corporate reporting, Richard Martin, stated that ACCA believes that for the purpose of accounting the threshold for the size of small companies should be set at maximum level as per EU accounting rules and for the purpose of audit, the limits currently defined in United Kingdom’s regulations should be maintained. Companies must be transparent and accountable except if a relaxation is allowed.
It was also discussed in the consultation to require small companies in United Kingdom to give fewer disclosures than they presently give to reduce the burden.
Richard added that ACCA does not think that this it is an appropriate initiative because this could lead to loss of vital information which stakeholders may be looking for. ACCA agrees with the disclosures which BIS plan to require.
He added that there should be more necessary components in the financial statements so small businesses should have clear understanding of what is required for the published accounts to be complete and fair. We look towards FRC (Financial Reporting Council) to assist in this regard when standards for small entities are concluded as law.
ACCA also believes that the small entities relaxations should also be given to those public limited companies which would have been small companies if they would not have gone public. While summing up, Richard said that the privileges in the accounting requirements for smaller companies, which practically applicable and not uncertain, are vital to lower the managerial burden.