A company must comply with certain legal requirements including having a memorandum and articles of association, a director, and paying compliance costs. A company can be a private or public limited company. Company accounts are highly regulated to ensure transparency and standardization in what information they contain, the accounting methods used, and how they are presented. All listed EU companies must follow International Accounting Standards Board standards when preparing accounts, while other UK companies can follow IASB or UK standards. Financial statements that are presented include a statement of financial position, statement of income, statement of changes in equity, statement of cash flows, accounting policies, and explanatory notes.

1. Company Accounts

2. Company Basics
 A company is a separate legal entity. Therefore, ownership may be separate from management
and shareholders have limited liability for debts.
There are certain legal formalities that a company must comply with:
 Memorandum of association
 Articles of association
 There must be a director
 Cost of compliance e.g. Company House fees, audit fees
A company can be a Private Limited Company (Ltd) or a Public Limited Company (Plc) which is
listed on the sto

3. Evaluation of a Company
+ Shareholder limited liability
+ Transparency
+ Separation of ownership and management
+ Easily transfer shares
- Higher costs of formation
- Compliance with legislation – CA2006
- Duties of directors (stewardship)
- Transparency
- Separation of ownership and management e.g. director bonuses

4. Regulation of Company Accounts
Why is regulation of Company Accounts needed?
Separation of control from ownership
Limited liability of shareholders
Social justice

5. Regulation of Company Accounts
Company accounts prepared for external publications are highly regulated. The rules apply to
confirm:
What information the accounts should contain
What accounting methods should be adopted
Presentation of financial statements

6. International Accounting Standard
All listed companies in the EU (on SE) must follow IASB standards when preparing accounts
All other UK companies can either follow IASB standards or UK accounting standards
Strategy to replace UK standards with IASB standards  replacement of UK GAAP with FRS 102
IASB produces International Financial Reporting Standards (IFRS’s)

7. Sources of Accounting Concepts
 IASB’s Framework for the Preparation and Presentation of Financial Statements
IAS 1 Presentation of Financial Statements
GAAP

8. Presentation of Financial Statements
Financial Statements should include:
1. Statement of financial position
2. Statement of income
3. Statement of changes in equity
4. Statement of cash flows
5. Accounting policies and explanatory notes
Published accounts will also contain a Directors’ report, Auditors’ report, Operating and financial
review, Corporate Governance, Social responsibility report and Value added.