Financial reporting has to be proportionate to the needs of users of the financial statements. To require a company at the smaller end of the scale to report the same level of detail as that of a blue-chip PLC would clearly be unreasonable and would result in financial information that is not relevant or appropriate to the company in question.
Companies (and groups) are classed as small or medium depending on the levels of turnover, gross assets and number of employees and these current levels (which are set for change in 2015) are summarised as follows:
|Turnover||Balance sheet total||No. of employees|
|Small group||£6.5m net£7.8m gross||£3.26m net£3.9m gross||50|
|Medium-sized group||£25.9m net£31.1m gross||£12.9m net£15.5m gross||250|
The size limits above determine whether a business is deemed as ‘small’ in the eyes of the Companies Act 2006 and thus eligible to take advantage of reduced disclosure requirements in its financial statements. A company must satisfy two out of the three criteria above for two consecutive years before they can be classed as small. Financial statement preparers must keep in mind that in the event that the ...