Accounts and audit
Whose responsibility is it to prepare, lay (if required) and deliver the accounts?
It is the directors.
What are the procedures for approving, signing, laying and delivering the accounts?
Directors are required to keep proper accounting records and to prepare, or have prepared, statutory accounts. It is specifically required that the accounts be approved by the board, either by a majority vote at a board meeting or by means of a unanimous written resolution. In approving the accounts the directors are of course signifying their belief that the accounts are accurate and comply with the law, not that they are pleased with the figures. The decision to approve the accounts must be minuted.
After approval any director signs the balance sheet, and any director or the company secretary signs the directors' report and the directors' remuneration report, if there is one. The audit report, if there is one, is then signed by the auditor. It is normal for three sets of the accounts to be signed in ink, one for Companies House, one for the auditor to keep and one for the directors to keep. Further sets as required are produced with printed names and dates rather than signatures.
The accounts must be delivered to Companies House within the relevant time limit, and within the same time limit they must be delivered to every member and any other person entitled to receive them. In the case of a public company the accounts must be laid at a meeting, but this is only done in a private company if (which is unusual) it is a requirement of the articles. It is normal to do this at the annual general meeting but it can be done at a general meeting. It is normal, if the accounts are laid, to have a members' resolution to accept, approve or adopt the accounts. In the case of a quoted company there must be a vote, which is advisory only, on the directors' remuneration report.
What are the requirements for a dormant company?
The directors of dormant companies must sign, lay (if required) and deliver accounts in the same way as required for active companies. Such accounts may, subject to circumstances, be extremely simple and can just consist of a balance sheet containing two figures (share capital and cash).
A dormant company may dispense with an audit if all the following conditions apply:
It must qualify as a 'small company' for the accounts period in which it became dormant.
It has been dormant since the end of that accounts period.
It was not required to prepare group accounts for the period.
It is not a banking or insurance company, and it is not authorised under the Financial Services Act.
It has not made any significant accounting transactions at all in the period.
What is the composition of a set of accounts?
The Companies Acts require that the statutory accounts comprise the following:
A profit and loss account made up to date within seven days of the accounting reference date. In the case of a company not trading for profit it will be an income and expenditure account.
A balance sheet as at the final date of the profit and loss account.
Notes to the financial statements.
A directors' report.
A directors' remuneration report (in the case of quoted companies).
A business review (for all but small companies).
A cash flow statement.
A consolidated profit and loss account and consolidated balance sheet where required.
The requirements are modified in the case of small and medium-sized companies. Comparable figures for the previous year or period must be stated.
What are the special rules for the period of a company's first accounts?
A company's first accounts must cover a period not less than six months and not more than 18 months. If the period of the first accounts is more than 12 months, the period allowed for laying and delivering is the later of:
nine months (six months for a plc) from the first anniversary of incorporation of the company;
three months after the end of the accounting reference period.