Hello,
We act for a small hair salon preparing accounts under FRS105. The balance sheet has never been strong with the owner withdrawing almost all distributable reserves.
https://www.icaew.com/technical/financial-reporting/uk-gaap/uk-gaap-faqs...
This says:
Disclosures may therefore be helpful if management conclude that:
there are material uncertainties related to events or conditions that cast significant doubt upon the entity’s ability to continue as a going concern. Uncertainties are considered material if their disclosure could reasonably be expected to affect the economic decisions of shareholders and other users of the financial statements. Users may want to understand how management reached their conclusion (including the basis of any assumptions used in their assessment) and how the uncertainty would impact the entity’s resources, liquidity and solvency.
If there was another lockdown it would likley be then end for this one. Would anyone include a disclosure for those in this sector on this basis under FRS105?
Replies (5)
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The Whole point of Micro accounts was to get rid of notes
Who are the notes for that you suggest adding?
Will the notes mean that lenders and those giving credit will reduce the operating capacity without there being a lockdown
Is the company already insolvent?
Who and _£what are the creditors.
Landlord , lease,?
Equipment, lease?
Director personal guarantees?
Perhaps director is personally bust.
Most going concern clauses may be fatuous generic copy and paste covid 19 wording.
However if significant liabilities that cannot be paid on demand or agreed terms, then directors need to engage with creditors.
To agree a settlement plan.
That is the fiduciary duty of directors in covid 19 and non covid 19 times.
The note to the accounts follows.
Reality check....
On the public record 9 months later?!!
By then company shape and fate may be certain
just keep it simple, minimum disclosure required by law , otherwise clients might sue for unnecessary public disclosures