Government and FRC consider cutting financial reporting burden for small businesses
By ECM Plus staff
ECM Plus +++ Proposals to simplify the financial and corporate reporting requirements for the smallest businesses are the subject of a new ‘Discussion Paper’ published by the Department for Business, Innovation and Skills (formerly DTI) and the Financial Reporting Council.
Dubbed ‘Simpler Reporting for Smaller Businesses’, the discussion paper sets out ideas to reduce the amount of reporting micro-entities would be required to undertake.
FRC said this could benefit around 5 million businesses and result in considerable cost savings in relation to the preparation of their accounts.
The paper proposes easing corporate reporting procedures so that micro-entities are only required to file a simplified Trading Statement in place of the current Profit and Loss account, a simplified Statement of Position and a simplified Annual Return.
FRC added that the paper also proposes developing an integrated software package to help small businesses prepare financial information. This could allow managers to gain a better understanding of the trends in their businesses’ performance and help them plan for the future.
The Minister responsible for Corporate Governance, Edward Davey commented: “Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow – which ultimately benefits the entire economy and is absolutely central to the Coalition’s vision for Britain. A new deregulation from EU rules targeted at micro businesses means we now have a chance to deliver these benefits.
Added Davey: “The financial reporting regime must also serve the users of the information published by companies – whether they are customers, banks or government agencies. So we look forward to receiving responses to our proposals from a broad range of interested parties in the coming months”.
FRC said the paper was not intended as a statement of Government policy. It has been developed to stimulate discussion and gather evidence before the Government decides whether to take forward any further action in this area. Written responses to the proposals should be provided by 30 October 2011.
The paper complements the Office of Tax Simplification’s (OTS) discussion document on options for simplifying taxation for the smallest businesses, which was published last month.
FRC said a micro-entity is defined by the Competitiveness Council as a company with a turnover of less than £440,000, with net assets of less than £220,000 and employing fewer than 10 people, covering approximately 60 percent of companies registered at Companies House and 3.5 million unincorporated businesses.
The Discussion Paper is available here.
Responses should be sent to:
Julian Thompson at firstname.lastname@example.org, or snail mail to:
Department for Business Innovation and Skills
Spur 2, Floor 3
1 Victoria Street
London SW1H 0ET