Financial Reporting Standard for Small Entities FRSSE
The Financial Reporting Standard for Small Entities (FRSSE) is very important for people who run their own small companies. It permits a much reduced level of public disclosure for companies which are small, and in particular, allows such companies to dispense with a costly audit each year.
Previously it was necessary for any company with a turnover of at least £1 million per annum to have an audit carried out each year. Such audits must be carried out by firms who are authorised to do so and, not surprisingly, are relatively expensive.
In recent years however, the reporting regime for small (and medium-sized) companies has become considerably more favourable as a result of recognising two important facts:
- Many small companies cannot afford an annual audit.
- A formal audit is unnecessary when the only parties who have an interest in the result of the audit are the individuals who run the company.
To qualify as a small company and therefore fall within FRSSE a company must meet two of the three following criteria:
- Average number of employees is less than 50 in the year in question.
- Turnover is not more than £6.5 million.
- The balance sheet total is not more than £3.26 million.
In effect FRSSE means that company proprietors can deal with all accounting, reporting and taxation obligations if they have the skill to do so, without recourse to expensive external advisers.
This article was written by:--Martinc 18:51, 30 June 2014 (BST)
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