Accounting and Disclosure

Question 1

Balance sheet - what is it?

Answer 1

Snapshot of the financial position of the company at the end of FY

Question 2

Profit and Loss account - what is it?

Answer 2

Income and expenses of the company over the FY

Question 3

Notes in the accounts - what are they?

Answer 3

Explanation of entries in both balance sheet and P&L

Question 4

What is purpose of the accounts?

Answer 4

True and fair value of the state of affairs of the Company

Question 5

Rules that regulate accounts - what are they?

Answer 5

Company Act 2006, FRS, the Listing Rules and UK Governance Code

Question 6

Rules about filing accounts?

Answer 6

Directors duties: 1 - approve and sign accounts; 2 - have accounts audited and signed by auditors; 3 - Send accounts to shareholders and directors report; 4 - Present at annual shareholder meeting together with 5 Present remuneration report to shareholders; 5 - send to company registrar within 6 months ;

Question 7

Which body determines accounting standard?

Answer 7

FRC or Financial Reporting Council

Question 8

UK account standards - when introduced and what are they?

Answer 8

1 Jan 2015 and they are FRS 100 and FRS 105 - UK Gaap

Question 9

Internatiponal acc. standards - who introduced and when?

Answer 9

IASB - Internt. Accounting Standards Board.

Question 10

IAS 24 - what is this and what is concerned?

Answer 10

it concerns related party transactions: 1 - short term benefits, 2 - long term benefits, 3 - post employment benefits, 4 - termination beneftis, 5 - equity compensation benefits on AGGREGATED BASIS

Question 11

Related parties - who are they?

Answer 11

Key Management Personnel

Question 12

If an award lapses - what effect on P&L?

Answer 12

Reversed expense for non-market conditions only

Question 13

Treatment of phantom plans in accounting?

Answer 13

It is treated as share based payment, but treated differently - expense is “trued up” each year to the amount of cash actually paid.

Question 14

What affects true value of an option?

Answer 14

Market price at the time, volatility, exercise price, expected option life, dividends and risk-free interest rate

Question 15

Free shares accounting charge SIP?

Answer 15

as these are real shares - full charge at the time of award at the market price BUT if forfeitable - charge is spread over the forfeitable period. If forfeited - charge is reversed.

Question 16

Matching shares accounting charge SIP?

Answer 16

Controversial - as if forfeited, similar to SIP, value is accelerated not reversed.

Question 17

what Remuneration report consist of?

Answer 17

Annual Remco Chair statement, policy report (binding vote) and annual report (annual advisory vote)

Question 18

Remuneration report requirement to the website

Answer 18

un addition to Remuneration report, company must show results of shareholder votes, changes in policy, payment for loss of office, payment to directors who left and how they were calculated?

Question 19

Remuneration committee chair statement - whats in it?

Answer 19

major decision and key changes and most likely a new share plan how this meet short and long term company strategy and a summary of exercise of discretion by the Remco

Question 20

Policy report consideration and requirement

Answer 20

Remuneration Payment or payment for loss of office must be consistent wit approved policy (that is binding vote) or specific approval should be sought.

Question 21

Future policy table - what includes?

Answer 21

Salary, benefits, pensions and equity compensation. Purpose, Operations, Changes, Recovery and witholding of Payments, Opportunity, Performance framework

Question 22

what Policy report includes?

Answer 22

1 -future policy table, 2 approach to recruitment, 3 - service contracts, 4- illustration of application such as bar charts, 5- policy for payment for loss of office, 6 - statement on how this compare with other payments, espp, 7 - use of discretion, 8 statement on how shareholder views were taken into account

Question 23

what Annual remuneration report contains?

Answer 23

Single figure, pension, payments to directors who left in the past, payments for loss of office, statement of directors shareholding interests, performance graph and table (to help shareholders to assess how pay is linked to performance), % change in remuneration of directors, relative importance of spend on pay (all salaries, directors pay, dividends), statement of implementation of remuneration policy, voting on the previous report, considerations by directors of matters relating to directors remuneration - 11 IN TOTAL

Question 24

Gender pay reporting

Answer 24

introduced in 2010 Equality Act

Question 25

first snapshot date for Gender pay reporting

Answer 25

5 april 2017

Question 26

first gender pay reporting deadline

Answer 26

4 april 2018

Question 27

6 metrics to be published under Gender pay reporting

Answer 27

Mean and Median pay for women vs men in certain groups hourly rate, proportion of women receiving bonus in certain groups, Mean and Median bonus gap, proportion of men and women in each pay quartile