Under UK GAAP, accounting standards and Company Law it is required for UK company fiscal statements to incorporate a report of the directors. The amount of detail included in the report of the directors depends upon the size of the company, i.e. whether is little, medium or big, and the attitudes of the single directors.
UK GAAP, accounting standards and Company Law dictates compulsory sections and paragraphs that must be included, which incorporate;
i) Principal activity – A little description of the activities of the business, i.e. what it does, and the environment in which it operates.
ii) The names of the directors during the year and details of changes in the directors during the year, such as appointments and resignations. In addition to this, any movement in directors between the year-end and the date the fiscal statements are sanctioned will likewise be revealed in the report of the directors.
iii) Statement of directors’ responsibilities – All directors must be made aware of their fiduciary duty and responsibilities in holding office before accepting the appointment. Directors have to state in their report, every year, that they;
a) prepare financial statements that give a true and fair view,
b) prepare the financial statements on the going referring basis unless the company really isn’t a going pertaining
c) Prepare financial statements that are compliant with all standards and companies Acts,
d) select suitable policies and apply them consistently,
e) make judgements and estimates that are prudent and reasonable
f) keep adequate records that are sufficient to show and explain the transactions and disclose with reasonable accuracy the position of the company,
g) Safeguard the assets of the company and take reasonable steps for the prevention and detection of fraud and other irregularities.
iv) Statement as to disclosure of information to auditors/accountants
v) Provide detail of political and charitable donations where the amount exceeds £2,000. In the case of charitable gifts the amount given for each purpose has to be disclosed where the total exceeds £2,000.
vi) If there is a purchase of own shares during the year the directors must state this in their report. In addition, they also have to state the number or percentage o shares, the reason for purchase and the consideration.
vii) If the number of employees exceeds 250 the directors report must state the company policies with regards to disabled employees.
viii)I f the company is small and taking advantage of the Financial Reporting Standard for Small Enterprises (the “FRSSE”) this fact must be disclosed in the directors’ accounted.
ix) Approva. An approval paragraph.
the director’s report in large companies requires additional disclosure such as a review of the business and the creditor payment policy.
When the company is owner managed, i.e. the directors are the owners and shareholders of the company, the directors’ report will often contain the bare minimum, i.e. just decent disclosure to satisfy UK GAAP, accounting standards and Company Law.
However, if there are external shareholders or the financial statements are circulated to many people it is not uncommon for the director’s report to contain a lot more detail about the company. Details such as what the company has achieved during the year (in both financial and non financial terms), details of company’s later intentions (such as growth, entering new markets, acquiring competitors, merging etc etc) and how this is going to be achieved and the achievements of the directors amongst other things. As previously mentioned, the amount of disclosure will depend upon the attitude of the directors’, how the year has gone and what they actually want the public to know.
www.englishteachernow.com BUSINESS ENGLISH – Financial Terms. Wayne Smith explains four financial terms for you and how some of them have become part of general English. If you are severe about you English, talk to a business professional who is also an experienced and respected English teacher.You may also sign up for private lessons in a broad range of special English categories.
Concerning ”wroted” at 2.20 – - I said ”THEY WROTE IT IN RED INK”
This is a classic example of ellision where two words are run together. It makes it very difficult for non native speakers to sort out where one word ends and the next one starts. I have difficulty understanding people from certain parts of the United Kingdom and also those from many parts of the USA because of this. Well done for identifying it. Wayne
2:20 wroted?
Hey Prof, i loved your video series so much that it inspired me to creat a video series on portuguese lesson. Do you speak portuguese? maybe u can be my first subscribe .
Tks for sharing your knowlodge , i will do the same.