The Technical Blog aims to provide useful links and resources based on the queries we receive and suggestions from delegates.

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The question arose whether a small UK needed an audit because it was a subsidiary of a Swiss large company.

The answer is Yes and the guidance is on ICAEW flowchart…

http://www.icaew.com/~/media/Files/Helpsheets/technical/audit-exemption-thresholds-for-companies-june-2010.ashx

Query

The query related to a foreign exchange contract which was in place before the year end. Losses were being incurred on this so the contract was closed off post year end. Can the losses be carried back to the previous year?

1. The standard you need is FRS21
2. It is probably a non-adjusting event because the conditions causing the loss (the fall in the Euro) occurred after the year end
3. This would mean you do not adjust the accounts and follow the disclosures set out for a non-adjusting event just as a note to the accounts
4. You need to see FRS21 PARA 22 ITEM g
5. I would also look at FRS 23 and Para 29 which might allow you to account for it partly in different accounting periods by looking at what loss would have occurred using the exchange rate at the year end

From a query:

What related party disclosures are needed in a medium set of abbreviated accounts?

The Companies Act Requirements for medium sized companies are set out in SI 2008 No. 410 Reg 4. The link is shown below

The basic situation is that the medium accounts files at companies House do not need to include related party transactions or the cashflow as these are required by accounting standards not Companies Act. Directors transactions must be disclosed as these are Companies Act requirements.

So all CA2006 requirements must be disclosed, other than the combination of certain P&L items (as in the Reg) but those required by accounting standards are not required (same as for small co abbreviated accounts).

The SI only refers to the profit and loss accounts and balance sheet and related notes, including directors.

http://www.legislation.gov.uk/uksi/2008/410/made

The update rental / service accounts can be found here:

http://www.arma.org.uk/doc/public/TECPLN10724-TECH-03-11-D5-rvsd-web.pdf

As mentioned by Peter Herbert and John Selwood on the recent updates

The ICAEW guidance on giving references can be found here:

http://www.icaew.com/en/about-icaew/what-we-do/technical-releases/~/media/Files/Technical/technical-releases/audit/AUDIT-02-01-Request-for-References-on-Clients.ashx

As highlighted on recent Accountancy updates

Guidance on the Bribery Act

As mentioned by John Selwood on recent audit updates

http://www.justice.gov.uk/guidance/making-and-reviewing-the-law/bribery.htm.

ICAEW guidance on how to resign as an auditor

http://www.icaew.com/~/media/Files/Technical/Audit-and-assurance/audit/working-in-the-regulated-area-of-audit/auditor-cessation-statements-flowcharts-and-guidance-notes.ashx

Compendium of Illustrative Auditor’s Reports on United Kingdom Private Sector Financial Statements for periods ended on or after 15 December 2010 (Revised)

This is the link mentioned by John Selwood relating to example audit reports

http://www.frc.org.uk/apb/publications/pub2515.html

This is link to Practice note 26 as mentioned by John Selwood on the recent Audit update

http://www.frc.org.uk/apb/publications/pub2193.html