Module 19 Flashcards
(38 cards)
Accounting records must be sufficient to
• to show and explain the company’s transactions;
• to disclose with reasonable accuracy, at any time, the financial position of the company at that time; and
• to enable the directors to ensure that any accounts required to be prepared comply with the requirements of the CA 2006.
Accounting records must, in particular, contain
• entries from day to day of all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure takes place, and
• a record of the assets and liabilities of the company.
If the company’s business involves dealing in goods, the accounting records must contain:
• statements of stock held by the company at the end of each financial year of the company;
• all statements of stocktaking from which any statement of stock has been or is to be prepared; and
• except in the case of goods sold by way of ordinary retail trade, statements of all goods sold and purchased,
showing the goods and the buyers and sellers in sufficient detail to enable all these to be identified.
How long should accounting records be kept?
• in the case of a private company, for 3 years from the date on which they are made;
• in the case of a public company, for 6 years from the date on which they are made.
What is accounting reference date? (ARD)
the specific date the accounting reference period ends
On which date does a company’s first financial year start and end?
• begins with the first day of its first accounting reference period; and
• ends with the last day of that period or such other date, not more than 7 days before or 7 days after the end of that period, as the directors may determine.
Which date is the default first ARD for all newly formed companies?
the last day of the month in which the anniversary of its incorporation falls (e.g., a company incorporating on 10 October 20X7 would generally have its first accounting reference date on 31 October 20X8).
How long does a company’s first accounting reference period
more than 6 months, but not more than 18 months, beginning with the date of its incorporation and ending with its accounting reference date.
when should directors file accounts
• for a private company, 9 months after the end of the relevant accounting reference period; and
• for a public company, 6 months after the end of that period (4 months if listed)
what’s the purpose of strategic report?
to inform members of the company and help them assess how the directors have performed their duty to promote the success of the company.
The strategic report must contain
• a fair review of the company’s business; and
• a description of the principal risks and uncertainties facing the company.
what can directors provide to shareholders instead of a full accounts and reports?
a copy of the strategic report together with the supplementary material
The directors’ report for a financial year must state
• the names of the persons who, at any time during the financial year, were directors of the company
• the amount (if any) that the directors recommend should be paid by way of dividend, unless the company is entitled an exemption due to its size.
if the company requires audit, the directors must a statement, approved by each directors at the time of the report, covering
• so far as the director is aware, there is no relevant audit information of which the company’s auditor is unaware; and
• the director has taken all the steps that ought to have been taken as a director in order to make themselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information.
directors report must be approved by who and signed by who?
approved by the board of directors and signed on behalf of the board by a director or the secretary of the company.
On what occasion should directors approve accounts?
When they are satisfied that they give a true and fair view of the assets, liabilities, financial position and profit or loss.
IFRS require that financial statements
shall present fairly the financial position, financial performance and cash flows of an entity
Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Conceptual Framework
What is the central requirement for the preparation of financial statement in the UK
True and fair requirement
FRC confirmed that what must be applied to ensure the financial statements give a true and fair view?
professional judgement
Preparing financial statements cannot be reduced to a mechanistic following of the relevant accounting standards. What are the steps?
- select appropriate accounting policies,
- consider what is and what is not material, and
- make judgements about things like valuation
aimed at giving a true and fair view.
In what situation can a management departs from a requirement of IFRS?
compliance with a requirement in an IFRS would be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework
But only when the relevant regulatory framework doesn’t prohibit such departure
When an entity departs from a requirement of IFRS, it must disclose
• that management has concluded that the financial statements present fairly the entity’s financial position, financial performance and cash flows;
• that it has complied with applicable IFRS, except that it has departed from a particular requirement to achieve a fair presentation;
• the title of the IFRS from which the entity has departed, the nature of the departure, including the treatment that the IFRS would require, the reason why that treatment would be so misleading in the circumstances that it would conflict with the objective of financial statements set out in the Framework, and the treatment adopted; and
• for each period presented, the financial effect of the departure on each item in the financial statements that would have been reported in complying with the requirement.
Departure from accounting standards may be referred to as
true and fair override
FCA requirements addressed on this course include?
Applicable to entities listed on?
• Listing Rules; and
• Disclosure Guidance and Transparency Rules.
on the main market of the LSE.
