UK regulation for company accounts - overview
The Companies Act 2006 (CA 2006) requires directors to ensure that the annual accounts give a true and fair view. In this section the Financial Reporting Faculty provides an overview of UK financial reporting regulation for different types of company.
Part 15 of CA 2006 includes requirements relating to the preparation of the company’s annual accounts, content requirements for the directors’ report and the strategic report, and the requirements and options for the circulation and filing of accounts.
Further rules and requirements relating to the form and content of company accounts are set out in secondary legislation:
- SI 2008/409 The Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 brings together in one place many of the statutory rules on form and content of accounts and reports for companies subject to both the small companies regime and the micro-entities regime.
- SI 2008/410 The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 brings together in one place many of the statutory rules on form and content of accounts and reports for large and medium-sized companies.
Determining the size of company
There are four sizes of company to consider when preparing and filing accounts and reports: micro-entity, small, medium-sized and large. It is important to determine the size of company in order to ensure that the relevant regulatory requirements for the preparation and filing of the annual accounts and reports are applied.
In particular, important simplifications are available for small companies and micro-entities when preparing and filing their annual accounts and reports. A number of simplifications are also available to medium-sized companies when preparing their annual accounts and reports.
For more information on determining the size of company visit How to determine the size of company.
For more information on the simplifications available to small companies and micro-entities visit the Small and micro-entity reporting hub.
Preparation of annual accounts and reports
CA 2006 recognises two financial reporting frameworks – IFRS and UK GAAP. In this context IFRS means international standards and interpretations that have been endorsed by the EU (EU-adopted IFRSs).
UK listed companies and AIM companies are required to use EU-adopted IFRSs in their consolidated accounts but may choose between EU-adopted IFRSs and UK GAAP in their individual accounts. Almost all other companies have a choice between preparing their accounts under UK GAAP or EU-adopted IFRSs.
For more information on the applicable financial reporting requirements for UK entities preparing financial statements in accordance with legislation, regulations or financial reporting standards applicable in the UK and Republic of Ireland, visit FRS 100 Application of Financial Reporting Requirements.
A parent company may, as well as individual accounts, be required to prepare group accounts for the year. CA 2006 provides a number of exemptions from this requirement, for example, for certain small parent companies and intermediate parent companies.
For more information on the regulatory requirements affecting UK company accounts, including the requirements and exemptions from preparing group accounts, Financial Reporting Faculty members can access the factsheet UK Regulation for Company Accounts.
CA 2006 includes an overarching requirement that the directors must not approve accounts unless they are satisfied that they give a true and fair view. This requirement applies whether the accounts are prepared under EU-adopted IFRSs or UK GAAP. However, accounts prepared using the micro-entities regime are presumed to give a true and fair view if they include the very limited disclosures required by law.
Entities that do not report under CA 2006 but are required, or choose, to prepare accounts that are intended to give a true and fair view, must also prepare accounts in accordance with either UK GAAP or EU-adopted IFRSs. This is subject to any restrictions in the scope of the standards, for example, due to legal restrictions or the requirements applicable to regulated bodies (such as charities).
For more information on UK GAAP visit the Financial Reporting Faculty’s UK GAAP hub.
For more information on preparing accounts under IFRS visit the Financial Reporting Faculty’s IFRS hub.
All companies, except small companies and micro-entities, must prepare a strategic report in accordance with s414A of CA 2006.
For more information and practical tips on the preparation of a strategic report visit The strategic report and how to prepare one.
The directors of all companies, excluding micro-entities, have a duty to prepare a directors’ report under s415 of the CA 2006.
For more information visit The directors’ report – an overview.
All companies are required to file a copy of their accounts and reports with the Registrar or Companies, although certain exemptions are available for unlimited companies and dormant subsidiaries. A number of filing options are also available for companies that qualify as small or as micro-entities. The regulatory requirements relating to the filing of company accounts, including filing deadlines, are set out in sections 441-443 of CA 2006.
For more information on filing requirements visit Filing requirements for UK companies.
For more information on the regulatory requirements affecting UK company accounts, including the filing requirements, Financial Reporting Faculty members can access the factsheet UK Regulation for Company Accounts.
Reporting requirements outside of the annual accounts and reports
Companies may also be required to disclose information outside of their annual report and accounts. For example, information on gender pay and supplier payment practices. As such requirements are outside of the annual accounts and reports, they are not covered in this section.
Revision of defective accounts
There can be circumstances when the directors of a company believe it would be appropriate to revise previously-published financial statements or have been encouraged to do so by another party such as the Conduct Committee of the FRC. Revision of the accounts would ensure accounts which are free from material misstatement are available to shareholders and the public record (ie, the Registrar of Companies).
For more information on the legal requirements and practical guidance on the best approach when the law is silent, Financial Reporting Faculty members can access the factsheet Revision of defective accounts.