Amended rules published Wednesday by the UK Financial Reporting Council (FRC) are designed to simplify accounting for the UK’s smallest companies.
The FRC released an amended version of the Financial Reporting Standard for Smaller Entities with a regime for use by so-called “micro-entities.”
A micro-entity is a company that does not exceed the limits of two of the following three criteria on its balance sheet date:
- Turnover: £632,000.
- Balance sheet total: £316,000.
- Average number of employees during the financial year: 10.
Micro-entities now are able to use the Financial Reporting Standard for Smaller Entities to prepare simplified financial statements with fewer disclosure requirements. Standards tailored to micro-entities were introduced into UK law in November 2013 following new EU legislation.
“Micro-entities that currently prepare their financial statements in accordance with the [Financial Reporting Standard for Smaller Entities] will continue to be able to use the same standard whilst also benefiting from the government’s simplification of the law,” Roger Marshall, an FRC board member and chair of the FRC’s Accounting Council, said in a news release. “The micro-entities regime will be available to over one and a half million small businesses.”
The amendments take effect from the same date as the new legislation, for financial years ending on or after September 30th 2013 for companies filing their accounts on or after December 1st 2013.
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine senior editor.