You will be delighted to hear that there are new Financial Reporting standards that came into force for accounting years that started from the 1st January 2016. You now have a choice to use a much simplified set of micro-entity accounts under FRS105, or to elect to use a more comprehensive set, similar to what you are used to, under FRS102.
Which one should we use?
The simplified balance sheet filed at Companies House with micro-entity accounts means that less financial detail is available to the public. This may be an advantage to some clients, however, for credit ratings it remains to be seen how the publishing of limited information could effect some clients.
At present FRS105 accounts do not offer much in the way of cost saving, as the bulk of the accounts preparation work is in the collation and preparation of information following generally accepted accounting practice. However, In the longer term other small Company legislative changes will remove the option of filing abbreviated accounts and will align more with FRS102, leading to more information being publicly available using this route, and increased costs of complying with more complex accounting standards
Micro-entity accounts may be less appropriate if the Company has borrowings or is trying to obtain finance as it may be more difficult for credit agencies and banks to assess the Company. This is not very different for the Abbreviated Accounts already submitted under FRSSE 2015, however under FRS105 there is a prohibition of the fair values and revaluation or assets, and for Companies with property and investments this might have an adverse effect on the Company’s Balance Sheet and credit rating.
If a Company own property, FRS102 requires regular revaluation which will be an additional cost to the business.
Also if the business is growing rapidly then it may make sense to start with FRS102.
Let us know if you want any help with making the decision.