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Who polices inappropriate use of FRS 101?

It appears that anyone can use FRS 101, ignoring eligibility criteria, without penalty

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Omnigss Ltd, has filed at Companies House accounts for the year ended 30 September 2019 prepared under FRS 101.  However FRS101 should only be used if a company is a member of a group which prepares consolidated accounts that are publicly available.  Omnigss is owned by a Jersey company whose accounts are not publicly avialable (I have asked for them, but been refused a copy).  The accounts have a clean Review Report from a firm of Chartered Accountants.

I have pointed out to both the Directors and their Accountants that Omnigss was not eligible to use FRS 101 but they have declined to do anything about this.

The FRC have said this is not a matter for them and suggested Companies House.  Companies House suggested contacting the Insolvency Service, but this is not of sufficient interest for the Insolvency Service to investigate.

ICAEW did make enquiries of the accountants, but the accountants only provided a review report (and presumably received representations from the directors about being entitled to use FRS 101), and the ICAEW did not take the matter further.

Is there anybody who will police the use of FRS 101, or can anyone file accounts prepared under FRS 101, even if not eligible?

 

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By paul.benny
19th Aug 2021 11:20

First principles:
- Directors are responsible for preparing financial statements that comply with applicable laws and regulations
- The auditors express an opinion, inter alia, on whether those financial statements have been properly prepared.
- Financial statements are primarily prepared for use by shareholders.

So to answer your question, it should be the auditors who confirm on the appropriateness of the accounting standards utilised. The professional bodies conduct various quality assurance reviews of their members, as does the FRC on published financial statements.

What is your concern here beyond the alleged inappropriate use of a reporting standard?

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By Edward Beale
19th Aug 2021 11:41

This is an example of blatantly inappropriate use of FRS101, as there are no publicly available consolidated accounts incorporating Omnigss.

My concern is that there appear to be no enforcement mechanisms covering the proper use of FRS101. And, if this is the case, there may well be other enforcement issues where audited accounts are not required.

There is no point to rules if they can be ignored. If there is no enforcement mechanism then FRS 101 should either be withdrawn, or the conditions for its use should be lifted.

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Replying to Edward Beale:
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By Wanderer
19th Aug 2021 11:54

None of the CA nor FRS accounts rules are effectively enforced or policed. Just look at the standard of many accounts filed at CH, often with CH online software.

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Replying to Edward Beale:
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By paul.benny
19th Aug 2021 11:55

The company is question qualifies as Small. It's pretty unusual to apply FRS101 to a Small company - not at all obvious why they chose that.

I've just checked the Companies House records and the 2020 accounts for that company are to FRS102. They note that the transition from FRS101 did not result in any material adjustments.

Other than 'they didn't follow the rules', still not sure what your concern is.

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By Tax is always taxing
19th Aug 2021 14:03

Put simply, not a lot happens and nobody really cares. If it was audited accounts their may be more interest.

Out of curiosity, why is it you care so much, you seem to have gone to a lot of trouble over this - I assume you have some business dealings with them or the owners?

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Stepurhan
By stepurhan
19th Aug 2021 14:32

It may become relevant in a court case in the future. The same could be said of the going concern judgement of the directors where a company was already £1.3 million in the hole before COVID and was £4.8 million under at 30 September 2020.

That is to say, it may be used as proof that the directors failed in their duties, allowing a lifting of the veil of incorporation.

Is that where your interest lies? Ranting more about this is just going to make people lose interest. Indicating why you care about this particular company might elicit more helpful information.

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