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FRSSE statements at odds with Companies Act Statements?

FRSSE statements at odds with Companies Act...

Hi,

Has anyone else had a problem with CH rejecting accounts when using the following statements after the balance sheet for FRSSE accounts? The wording below was taken straight out of the FRSSE 2008 section 2.36 and 2.37 which I downloaded from the ASB website -

The company has taken advantage of the small companies exemption from audit. The directors acknowledge that:

  • for the year ending XX/XX/XXXX the company was entitled to the exemption (under sections 475 and 477 of the Companies Act 2006);
  • No member or members eligible to do so have deposited a notice requesting an audit within the specified time period; and
  • The directors acknowledge their responsibilities for complying with the Companies Act 2006 with respect to accounting records and for preparing accounts which give a true and fair view of the state of affairs of the company as at the end of the financial year and of its profit and loss account for the financial year in accordance with the requirements of sections 394 and 395 (Duty to prepare individual company accounts and applicable accounting framework), and which otherwise comply with the requirements of the Companies Act 2006 relating to accounts so far as is applicable to the company.
  • The accounts have been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006.

·  They have requested that the following statement be used instead -

  • For the year ending XX/XX/XXXX the company was entitled to the exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
  • The members have not required the company to obtain an audit in accordance with section 476 of the Companies Act 2006.
  • The director's acknowledge their responsibility for complying with the requirements of the Act with respect to accounting records and for the preparation of accounts.
  • These accounts are prepared in accordance with the provisions applicable to companies subject to the small companies regime.

Have I just made a bleeding obvious mistake here or are the FRSSEs incorrect/misleading in their statement on page 7 paragraph 3 under the heading 'Status of the FRSSE' that 'The legal requirements set out in the FRSSE are intended to reflect company law, including the Companies Act 2006 and amendments and regulations issued thereunder...'.

Someone else must have come across this already if following FRSSEs so I would be eager to hear their comments.

Many thanks.

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By taxguru
14th Jun 2012 13:54

Whilst technically your argument is correct, CA 2006 also says as follows:

s.1068: Registrar's requirements as to form, authentication and manner of delivery: the registrar may:

(2)(a) : require the contents of the document to be in a standard form.

So, may not be entirely at odds with the company laws.

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By DMGbus
14th Jun 2012 14:04

"Part 15"

Sage Accounts Production currently appears to default to include the "Section 15" bit.

I've seen Companies House accept this terminology.  But then again, when edited to delete section 15 and instead refer to Small Companies Regime., this has been accepted also by Companies House in recent months.

Here's a "section 15" one accepted by Companies House last month:

==============================================================================

In approving these abbreviated accounts as directors of the company we hereby confirm:

(a) that for the year stated above the company was entitled to the exemption conferred by Section 477 of the

Companies Act 2006 ;

(b) that no notice has been deposited at the registered office of the company pursuant to Section 476

requesting that an audit be conducted for the year ended 31 August 2011 ; and

(c) that we acknowledge our responsibilities for:

(1) ensuring that the company keeps accounting records which comply with Section 386 ; and

(2) preparing financial statements which give a true and fair view of the state of affairs of the company as

at the end of the financial year and of its profit or loss for the year then ended in accordance with the

requirements of Section 393 and which otherwise comply with the provisions of the Companies Act

2006 relating to financial statements, so far as applicable to the company.

These abbreviated accounts have been prepared in accordance with the special provisions of Part 15 of the

Companies Act 2006 relating to small companies .

The abbreviated accounts were approved by the Board on 1 May 2012 and signed on its behalf by 

=================================================================================

Personally all that I'm concerned with is that profits / assets / liabilities are accurately reflected, lowest legitimate tax liability is obtained and late filing fines are avoided.   To me the cosmetics (words) are a boring necessity which we should strive to get right to avoid accounts getting rejected.  Online filing (using Companies House .pdf) is good at "giving Companies House what they want" (but remember in the notes to change year of FRSSE to 2008).

PS. I unintentionally included the "section 15" bit in the above Abbeviated Acounts because it's oh so tedious having to continually edit Sage Accounts Production templates / defaults.   Looks like I put it right in 2011 then in 2012 a Sage update un-did the correction.

 

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avatar
14th Jun 2012 17:00

 

 

Hmm, so it seems I am not an idiot afterall, but lesson learned and it is best to just roll over and do whatever CH say.

It is very frustrating though, this was to help a friend who came to me 2 weeks before the filing date, who was not registered for online filing, and who had a bag of receipts and not much else. The accounts were delivered by hand as it was so close to the deadline and they weren't registered, so its frustrating that some wording that, by the look of it, is sometimes accepted by CH has actually led to (I presume when we get the next letter) a £150 fine.

You live and learn...

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19th Jun 2012 11:38

The FRSSE is in error

I have always assumed that the longer wording for the directors' responsibilities statement in section 2.37(c) of the FRSSE is in error as it is not in accordance with section 475(3)(b) of the Companies Act 2006 or the Companies House website.

The longer FRSSE wording looks like an error that arose when the FRSSE was updated from the Companies Act 1985 regime.

Having said that, the longer wording in the FRSSE, in my opinion, still meets the requirement of section 475(3)(b) of the  Companies Act 2006 and should not be rejected by Companies House. The longer wording is very commonly used.

Ironically, in the early days of the Companies Act 2006 we had the opposite problem. One team at Companies House was rejecting the shorter wording that appeared on their own website, and sending out a letter based on the FRSSE wording. Such is life!

Philip Hodgson
VT Software

 

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By DMGbus
20th Jun 2012 13:32

Companies House own template

Here's what Companies House own (.pdf) template has as wording (March 2012):

a. For the year ending 30 June 2011 the company was entitled to exemption from audit under section

477(2) of the Companies Act 2006 relating to the small companies regime

b. The members have not required the company to obtain an audit of in accordance with section 476 of the

Companies Act 2006

c. The directors acknowledge their responsibility for:

i) ensuring the company keeps accounting records which comply with Section 386; and

ii) preparing accounts which give a true and fair view of the state of affairs of the company as at the end

of the financial year, and of its profit or loss for the financial year, in accordance with the requirements

of section 393, and which otherwise comply with the requirements of the Companies Act relating to

accounts, so far as is applicable to the company.

d. These accounts have been prepared in accordance with the provisions applicable to companies subject

to the small companies regime

Approved by the board on: [date]

===============================================

Now, whether the above is technically correct by the Companies Act, ACCA, ICAEW, FRC, FRSSE or CCAB guidance or edicts is of no interest to me, it's all rather tedious and boring.

What DOES matter to me is what will Companies House accept - answer the above text taken from Companies House own .pdf template.

So, using Companies House template works - that is my preference, rather than relying on commercial software that has to rely upon  ACCA, ICAEW, FRC, FRSSE or CCAB guidance or edicts which might not accord with Companies House in house interpretation.   As it happens the commercial software that I have the misfortune to regularly use (Sage Accounts Production) is more or less guaranteed to get this wrong with regard to wording (eg. "section 15") - this wholly justifies my stance of preferring to use Companies House .pdf template for Abbreviated Accounts. 

 

 

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By smallbeancounter
27th Jun 2012 13:49

You may not have to pay the fine. I used some wording a few years ago which Companies House rejected leaving me insufficient time to resubmit, but I wrote to point out that my wording appeared to comply with the Act and they let me off the fine provided I used their wording in the resubmitted accounts.

But I agree with DMGbus - running any business nowadays is mainly a matter of jumping through hoops and the minute you start arguing about whether the hoop is the right shape or not you waste a lot of time.

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