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Financial statements showing the state of affairs of a business, or other organization, at a particular date and the results of operations during the period, usually one year, which ends on that date.The nature of these accounts will vary according to the entity to which they apply and with the various regulations and provisions, legal or otherwise, relating thereto.
The annual accounts of limited companics are governed by the requirements of the companies act and these accounts must be attached, together with other prescribed documents, to the annual return which each company is obliged to file in every calendar year with the Registrar of Companies. The contents of these accounts must conform with the provisions of the fourth schedule to the 1985 Companics Act. This replaces the eighth schedule to the 1948 Act, which was subsequently amended by the 1967 Act and again by the Companies Act 1981. This latter Act also introduced standard formats for both balance sheet and profit and loss account – companies being given a choice of format. At the same time the 1981 Act made special provisions for smaller private companies. It separated these into two classes, ‘small’ companies and ‘medium-sized’ companies (see small companies, accounts of), allowing each to file modified sets of annual accounts and to dispense with, in the case of small companies, the directors’ report. All companies registered under the Companies Acts whether public or private must attach to every balance sheet filed a copy of an auditors report, inthe case of modified accounts, a modified auditor’s report.
Additional requirements are attached to the accounts of certain specified types of company, e.g. banks, building societies. insurance companies, etc. There are also regulations concerning the composition and filing of group accounts.
Annual accounts are not, of course, the preserve of limited companies. They are needed, for tax assessment purposes if for no other, by the proprietors of virtually all trading organizations. Non-company accounts, though not bound by the demands of the Companies Acts, tend to appear in a very similar form to those of limited companies, particularly when prepared by independent accountants. Non-trading organizations also produce annual accounts though these usually substitute an income and expenditure account for the profit and loss account.
The 1976 Companies Act attempted to speed up preparation and filing of the iccounts of limited companies by making it obligatory for such accounts to be submitted to the Registrar within seven or ten months (depending on whether the company is a public or a private company) of the end of the financial year unless extenuating circumstances can be shown to apply.
Reference: The Penguin Business Dictionary, 3rd edt.
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