Accounting Standards

FRS 8 (revised) - Transactions with Related Parties

A related party includes a director of the company, their family, or other businesses they control.  Transactions with related parties need to be disclosed if they are material to either side.  Some of the exemptions previously available have been removed so more will have to be disclosed from now on. For example, employee emoluments are no longer exempted.  Therefore if the company employs a family member of a director their details would need to be disclosed in a note to the accounts.  Similarly dividends paid out to the directors and their family by the company would requrie disclosure.

The full standard is available here.

FRS21 Events after the balance sheet date

This standard has now been clarified in respect of the poistion regarding dividends.

In order to be included within a set of accounts, the dividend needs to be approved by the shareholders prior to the end of the period.  It will need to be of the form £x per share and can no longer be based upon a percentage of distributable reserves.

Therefore it is imprortant to consider what dividend to vote before the end of the period.  Note that dividends can only be paid out of distributable reserves, i.e. profit the company has already made. Please contact us if you would like any help drawing up the relevant paperwork.

Going Concern

When preparing statutory accounts, directors are required to consider whether the company in question is likely to remain as a going concern for at least 12 months from the date of signing off the accounts.  The Financial Reporting Council have recently issued guidance on this. The guidance includes a number of examples of the sorts of disclosures that will need to be made in company accounts.