Companies prepare Statutory Accounts as official financial reports at the end of every financial year. These accounts are mandatory under UK law and follow specific accounting standards. They offer shareholders, investors and other stakeholders a complete view of a company’s financial health.
Statutory Accounts vs Management Accounts
Before delving into the nitty-gritty of Statutory Accounts, let’s distinguish the difference between them and Management Accounts. Businesses prepare Statutory Accounts annually for external stakeholders.
In contrast, businesses create Management Accounts more frequently for internal use. Management Accounts focus on providing insights for day-to-day decision-making, while Statutory Accounts present a formal snapshot of the company’s overall performance.
What Do Statutory Accounts Include?
1. Company Information Page
The company information page outlines the basic details about the business. It includes:
- The company’s name and registration number
- The address of its registered office
- Names of directors and accountants
2. Directors’ Report
The directors’ report offers a summary of the company’s activities, performance and future prospects. It may include:
- An overview of the business’s financial year
- Information about market conditions, risks and opportunities
- Corporate governance and policies
For smaller businesses, this report is optional if they meet specific criteria, such as having a turnover below £10.2 million. However, the turnover threshold for small companies will increase to £15 million from April 2025.
3. Balance Sheet
The Balance Sheet shows the company’s financial position at the end of the financial year. It highlights:
- Items the company owns, such as cash and property
- Money the company owes, such as loans and trade payables
- The value left for shareholders after liabilities are deducted from assets
4. Profit and Loss Statement
The Profit and Loss (P&L) Statement summaries the company’s financial performance over the year. It includes:
- Money earned from sales or services
- Cost incurred during operations
- The bottom line after all expenses are deducted from revenue
5. Cash Flow Statement
The Cash Flow Statement tracks the company’s cash inflows and outflows. It is divided into 3 categories:
- Operating activities (Day-to-day business operations)
- Investing activities (Buying or selling assets)
- Financing activities (Borrowing or repaying funds)
While this is mandatory for larger companies, smaller businesses that meet the updated small company thresholds after April 2025 may be exempt.
6. Notes to the Accounts
Notes provide additional context for the figures in the financial statements. They explain:
- Accounting policies used
- Breakdown of specific figures, like debts or fixed assets
- Any potential risks or liabilities
Filing Deadlines
In the UK, private companies must file Statutory Accounts within nine months of the financial year-end, while public companies must file them within six months. Consequently, missing these deadlines can result in penalties.
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The information provided in this article is intended for general guidance and informational purposes only. While we strive to ensure accuracy and keep content up to date, tax laws and regulations may change.