Alright, so I've been critical about the ability of some company directors to grasp the nature of their obligations. Of course, the fact that they aren't accountants means that they are redeemable, so here's a basic guide to company accounts for small companies.
The first thing to be borne in mind is what exactly you need to produce. Most small companies make the mistake of assuming that their accounting software will produce an acceptable set of accounts. Yes, they'll produce you a profit and loss account and a balance sheet for the year. They won't provide you with comparables (always useful) but they represent a set of accounts, right? Wrong.
So, what represents a full set of accounts for a small company? This is not as easy a question as it might seem. The primary guidance in law is to be found at Section 226 of the 1985 Companies Act. At least, that's what everyone tells you. What it says is:
226.—(1) The directors of every company shall prepare for each financial year of the company—
(a) a balance sheet as at the last day of the year, and
(b) a profit and loss account.
Those accounts are referred to in this Part as the company's "individual accounts".
Not altogether helpful, in that it appears to confirm your initial conclusion. However, reading on, paragraph (3) states;
(3) A company's individual accounts shall comply with the provisions of Schedule 4 as to the form and content of the balance sheet and profit and loss account and additional information to be provided by way of notes to the accounts.
Excellent, some more legal stuff. Alright, you might wish that, instead of referring you to somewhere else, they might state it there. However, this is corporate law we're talking about so, in the next instalment, we'll follow the trail.
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