In the excitement of an economic outlook rising like the incoming tide during the last quarter of 2013, together with the ‘silly season’ most of us would probably have missed Statutory Instrument No. 1970 – The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, and off course you would be forgiven for it. This particular statutory instrument made the duty to provide a Strategic Report a part of UK financial reporting legislation.
To most us the update to the Companies Act 2006, Part 15 – Accounts and Reports, will not have any impact, if our our daily task is that of preparing annual statutory financial accounts for approval by the board of directors of a UK incorporated company. This is because under section 414B of the Act, an exemption applies as follows:
414B Strategic report: small companies exemption
A company is entitled to small companies exemption
in relation to the strategic report for a financial year if—
(a) it is entitled to prepare accounts for the year
in accordance with the small companies regime, or
(b) it would be so entitled but for being or having
been a member of an ineligible group.
Therefore, if you prepare annual accounts based on the small companies exemption in section 477, namely:
477 Small companies: conditions for exemption from audit
(1) A company that meets the following conditions in respect of
a financial year is exempt from the requirements of this Act relating to the audit of accounts for that year.
(2) The conditions are—
(a) that the company qualifies as a small company in relation to that year,
(b) that its turnover in that year is not more than £5.6 million, and
(c) that its balance sheet total for that year is not more than £2.8 million;
then you do not have to be too concerned about the requirement to include a Strategic Report as part of the Annual Accounts ending on or after 30 September 2013.
If the answer is that you actually qualify, under the Act to include a Strategic Report, then in part II of this series of articles, we will set out the more detailed minimum requirements you will have to include, in order to stay compliant with the Financial Reporting requirements, as set out in the Companies Act 2006.
©2014 – 3resource
* Quotes and references (sections) to the Companies Act 2006 available from Companies House