Until FRS102 basically an error had to be Fundamental for a Prior Year adjustment to be justified
‘Fundamental’ is defined in paragraph 63 of FRS 3 as an error of such significance as to destroy the truth and fairness and hence validity of a set of financial statements
Or you could make a change as a result of a change in Accounting Policy.
This position is about to change with arrival of FRS 102. Paragraph 10.21 states that ‘an entity shall correct a material prior period error retrospectively in the first financial statements authorised for issue after its discovery’. This means that, on adoption of FRS 102, the threshold for correcting an error by use of a prior period adjustment has reduced from fundamental to material (ICAEW)
The ACCA have a useful factsheet on prior year adjustments – Factsheet 188
Micro-entity accounts are a new type of accounts that can be submitted to Companies House from 1 December 2013. They will provide the smallest companies with the opportunity to prepare and publish simplified financial statements (profit & loss account; and balance sheet) if they wish.
A micro-entity is defined as meeting two of the following criteria:
Balance sheet total: £316,000
Net turnover: £632,000
Average number of employees during the financial year: 10 (or fewer)
Micro Entities are exempt from filing their profit and loss with Companies House.
Business Minister Jo Swinson said:
“Thriving micro-businesses are a vital ingredient for a stronger economy. However, because of their size they don’t always have dedicated finance teams behind them. We therefore need to make sure that they can focus on growing their business – rather than completing unnecessarily detailed paperwork.”
There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.
I don’t think this is going to help much? Micro Businesses still need to file corporation tax returns, deal with PAYE, RTI, VAT, minimum wage, Auto Enrolment Pensions, and a wide range of other requirements
I recently registered to use the HMRC Corporation Tax online services and my activation codes arrived today, so far I am impressed.
Obviously you need to know how to correctly do your Tax Computations first, nothing can remove the complicated tax calculations for Capital Allowances, Loans to Participators, Small Company Relief etc, you need skill for that part. But from reading the manual it seems that you can enter your accounts, computations and complete the CT600 and file it without needing to spend a fortune on specialist software to produce the iXBRL tagging now required.
Let’s see if I am still impressed when I try to enter the information.