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Public Benefit Entity and FRS 105

Public Benefit Entity and FRS 105

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I have promised a very small Public Benefit Entity that I would prepare accounts for them free of charge.

They only have volunteers and no paid employees and less than £10k income and balance sheet.

Year end 30/11/18

Can I prepare these under FRS105 to keep things simple or must they be under FRS102? 

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14th May 2019 15:32

Depends on what type of Public Benefit Entity. If your entity is a charitable company then it can't use FRS 105.

There's quite a good summary on who can/cannot adopt FRS 105 at: https://www.icaew.com/technical/financial-reporting/uk-gaap/frs-105-the-...

Thanks (1)
14th May 2019 15:36

Agree - "Public Benefit Entity" isn't enough information.

Say precisely what you mean.

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By MC1
14th May 2019 15:47

Thank you for the replies.

It is not a charity but it is a CIC (limited by guarantee).

Its primary objective is to provide a service to the general public and all funds loaned to it are to support that primary objective.

The ICAEW guidance says "Any entity that is excluded from the small companies regime may not apply FRS105." Is this relevant?

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14th May 2019 16:14

There's no reason that a CIC cannot use FRS 105, assuming that it's not ineligible for small company exemptions by virtue of being part of a listed group or involved in regulated activity (e.g. by the FCA or similar).

Whether you want to use FRS 105 for a vehicle which may be doing public fundraising is another matter. If I was (for example) a donor or a grant-maker, I'd be very cautious about a PBE which chose to prepare such minimalist accounts.

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By MC1
14th May 2019 16:25

Thanks both
Lion, whilst I don't think you managed to convince ShayaG last year, the combo of you and Mike Bath today have convinced me that there is nothing stopping a CIC from preparing under FRS105, albeit I note Mike's certainly relevant comments re donors views. I suppose there is nothing stopping them making the more detailed accounts available to interested parties.

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to MC1
14th May 2019 16:33

A CIC is not a charity - it's like a halfway house.

The classic CIC scenario is villagers clubbing together to buy the village shop and run it with volunteer support for their own purposes.

That's definitely a "self-interest" scenario. There's no reason why it should be subject to rules intended for charities.

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to MC1
14th May 2019 17:46

MC1 wrote:

Thanks both
Lion, whilst I don't think you managed to convince ShayaG last year.......

To be fair, I couldn't even convince him that a CIC wasn't a charity.

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By MC1
14th May 2019 17:17

Agreed.

Unlike charities, there are no specific tax breaks just for being a CIC, so to have more hoops to jump through would seem unreasonable.

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