The following is a summary of the principal provisions relating to company accounts. Further detail is presently beyond the scope of this database. The law changed with the implementation of Part 15 of the Companies Act 2006 on 6th. April 2008. For more details visit the Companies House website.
Keeping accounting records
CA 2006, sec387 requires all companies to keep accounting records which are sufficient to show and explain the company's financial transactions and are such as to disclose with reasonable accuracy, at any time, the financial position of the company at that time and are sufficient to enable the directors to ensure that the annual accounts meet the statutory requirements.
Records must be kept for 3 years if a private company and 6 years if PLC: CA 2006, sec388(4).
Accounting Reference Date (ARD) and financial years
When a new company is set up its Accounting Reference Date is the last day of the month in which it is registered: CA 2006, sec391(2).
The Accounting Reference Date identifies the end of the accounting reference period (ARP) or financial year, and the last dates for delivering accounts to members and Companies House. A company can change its accounting reference date: CA 2006, sec392. When a change is made the accounting period cannot last less than 6 months nor more than 18. The financial year ends with the Accounting Reference Date (plus or minus 7 days).
The last dates for filing accounts at Companies House and providing them to members is 9 months after the Accounting Reference Date if a private company and 6 months after if a PLC. (In the case of a new company it is 21 or 18 months after the date of incorporation, not the Accounting Reference Date.)
The accounts which must be filed are a balance sheet, profit and loss account, directors' report and auditors report: CA 2006, sec396.
Group accounts (or consolidated accounts) must be filed by a parent company in respect of itself and its subsidiary undertakings (CA 2006, sec404). Group accounts must comply with Sched. 4A. It is the ultimate holding company which must do this (CA 2006, sec405).
Annual accounts and group accounts must be approved by the board and signed by a director on behalf of the board: CA 2006, sec414. Civil penalties are imposed (strictly) for accounts filed late.
Up to 1month late: £150 (private); £750 (PLC)
Up to 3months late: £375 (private); £1,500 (PLC)
Up to 6 months late: £750 (private); £3,000 (PLC)
More than 6 months late: £1,500 (private); £7,500 (PLC): SI 2008/497.
Small and medium sized companies have exemptions. A small company need file only a modified balance sheet. Medium sized companies file a full set of accounts but with less detail than full accounts: CA 2006, sec444 - sec445.
Audit exemption applies to dormant companies and those that qualify as 'small', for which they must have a turnover of not more than £5.6 million; and have a balance sheet total of not more than £2.8 million.
