Most small companies may opt out of an audit and/or file abbreviated accounts at Companies House. However, they are still required to produce a full set of financial statements, for which they may use the Financial Reporting Standard for Smaller Entities (FRSSE). The FRSSE requires them to assess whether the use of the going concern basis of accounting is appropriate and to make disclosures of any material uncertainties. Whilst the full financial statements are not required to be filed, they may be given to customers, banks and others to allow business to continue.
Ian Wright, Director of Corporate Reporting at the FRC said:"We published an update on going concern for directors of listed companies in November last year to help them prepare for their forthcoming year ends. This latest publication is designed for the smaller companies. It is very practical in its approach. We consulted with a wide range of small business and accounting organisations in producing this update. We hope that directors of smaller companies will find it useful as they prepare accounts during this year."
The FRC is asking the small business sections of the professional accountancy organisations and the smaller business associations to help by passing on the update to the many smaller businesses in the UK that are facing difficult economic conditions.
Full details of accounting standards for small companies can be found here: http://www.frc.org.uk/asb/technical/frsse.cfm
