In November’s vlog, Maya Norbury discusses audit report implications where going concern issues arise.
By popular demand, join Malcolm Greenbaum on 29th November, 9.30-12.30, for our Autumn Budget Update.
Upcoming courses
Our 2025 CPD programme has just been released.
You can view our programme listing and download our booking form here. Our brochure and booking links will follow soon.
Date – Time – Course – Presenter
19th Nov – 9.30-12.30 – MTD Update – Rebecca Benneyworth
21st Nov – 9.30-12.30 – Autumn Audit Update – Peter Herbert
26th Nov – 9.30-12.30 – VAT Update – Mike Thexton
28th Nov – 9.30-12.30 – Audit Compliance Principals’ Regulatory Update – Peter Herbert & Jez Williams
29th Nov – 9.30-12.30 – Autumn Budget Update – Malcolm Greenbaum
3rd Dec – 9.30-12.30 – Being a Partner – Peter Herbert
6th Dec – 9.30-12.30 – Capital Taxes – Malcolm Greenbaum
Our AML, Ethics and GDPR E-Learning Programmes are available now.
“Excellent delivery, easily understood with some good points raised.” Delegate, Autumn series
FAQs from recent courses
Financial Reporting – Small and Micro Entity Accounts
1. Under S1A, where there is a group exemption for related party disclosure, is a note required to state this or is it assumed and no note is required? There is strictly speaking no requirement to disclose that this exemption has been taken, although in practice it is often stated. Where accounts are prepared under Section 1A and this is included, it makes sense that the reference be to FRS 102 Section 1A (1C.35) rather than the equivalent paragraph in FRS 102 Section 33 (33.1A). It’s important to remember that the exemption from disclosure of transactions only applies to wholly owned subsidiaries within the group.
2. Should I move a property (originally intended for sale but is now let) from inventory to investment property if FRS105 is applied? Yes – if the intended use of the property has changed, and it is now held either to generate rental income or for capital appreciation, it should be reclassified as investment property. However, under FRS 105 investment properties are measured at cost, so, provided there is no impairment, it is likely there will be no change in the book value as a result of the reclassification.
3. Can you prepare members accounts under FRS102 1A and then file FRS105 accounts at Companies House? No – A company must prepare only one version of its statutory accounts. If the company wishes (and is able) to file micro entity accounts, these must be its statutory accounts. If more detailed information is to be provided to members, this is essentially management information and care must be taken to remove any references to company law. Given the different accounting treatment between the two standards (revaluations, deferred tax and, soon, leases), this would likely be impractical and further detail of the micro-entity accounts (such as a detailed P&L) would probably be a better option – again it must be clear that this does not form part of the statutory accounts.
4. Can you put deferred tax in a set of FRS 105 accounts? No – FRS 105 neither requires nor allows the recognition of deferred tax assets or liabilities.
Questions taken from our recent Small and Micro Entity Accounting Issues course with Richard Hemmings.
Skills
What is an Accidental Manager?
According to the Chartered Management Institute it is ‘someone who has been promoted to a manager position because of their technical skills, expertise and track record but may lack the skills and experience in people management’.
They estimate that 70-80% of all managers in the UK are ‘accidental’ managers.
Whilst the survey wasn’t specific to the accountancy profession, it rings true for us. Many of the recent conversations we have with firms about their training needs have highlighted training for managers – in soft as well as technical skills. In an audit and accounting firm becoming a manager is a key step in progression to partner, but the role is also vital to the smooth running of the practice and can be critical in making sure clients get the service level they require.
The CMI study notes that more than half of the managers they surveyed had no formal management or leadership training and reported not being fully confident in their ability to lead others. There is some good news, though. 83% of managers who had received training in leadership and management reported feeling more confident in their abilities. Putting time into developing those soft skills really can help.
Financial Reporting
We have obtained an external valuation for an investment property we own but we have been given two different valuations by a professional valuer, a value subject to the existing lease (£5M) and a value assuming vacant possession (£4.5M). Am I right in taking the prudent approach and valuing at the lower value?
Investment property valuation is a management judgement, and the basis of that valuation is a significant part of that. The appropriate valuation will depend on the type of property and the likely customer, should it be sold on.
The essential premise of FRS 102 is that fair value is ‘the amount for which an asset could be exchanged … between knowledgeable, willing parties in an arm’s length transaction’. This will, of course, be governed by the market for the asset in question.
Let’s look at an example of a commercial office block. In current market conditions, offices are normally leased for long periods of time, therefore it would be appropriate to assume that the existing lease, or one with similar terms, would continue for the foreseeable future, including after a sale. Therefore, in this situation, a value assuming continuation of the existing lease would likely be the most appropriate one.
However, in the case of a domestic investment property, there’s a high chance that, if the property were sold on, it would be to private buyers or a business who might have other uses for the property, neither of which would be based on the existing tenants being in situ. In this situation, a value assuming vacant possession would likely be the most appropriate.
