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Changes to the UK Corporate Governance Code

The UK Financial Reporting Council (FRC) has confirmed it will launch a consultation on changes to the UK Corporate Governance Code.

Among the proposals, the watchdog said, would be the need for companies to link corporate governance to purpose, engagement with wider stakeholders, and consider how they benefit wider society.

The FRC added that it would sound out views on the future development of the UK Stewardship Code, including the extent to which the interests of wider stakeholders and broader social impacts,  including environmental, social and governance factors  were integrated into engagement and monitoring by investors.

The development comes after the FRC faced criticism from corporate-governance campaigners over claims that it had failed to enforce the requirements of section 172 of the Companies Act 2006.

Section 172 says company directors must not only run a successful business but must also take account of a wide number of stakeholders such as employees, its suppliers, the wider environment, and even the wider reputation of the company.

The FRC has revealed plans to conduct a series of targeted thematic reviews of company financial reports during 2019.

The audit watchdog said the reviews, which will supplement its routine oversight of financial reporting, will focus on four key areas. In its sights are smaller listed and AIM companies, revenue recognition, lease and financial instruments accounting.

The FRC said it planned to contact 40 small companies before their financial year-end and select two areas of disclosure from their upcoming reports and accounts for review.

The areas that the FRC will select for review,  will be drawn from five areas that have been flagged up in recent thematic reviews or in Financial Reporting Lab reports.

The IASB has recently introduced major new standards covering revenue, leases and financial instruments.

Disclosures about the effects of Brexit are also on the FRC’s hit list.

If you have any queries about how these changes will affect your business please send us an email on info@stanleycarter.co.uk or check our website for further details www.stanleycarter.co.uk

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Your accountant role can be an asset to your business

Retail spending in the UK fell in October 2017 at the fastest pace for any October since 2008. This has been attributed by some to consumers curbing purchases of non-food goods in the face of rising inflation. In addition, there remains the prospect of a 4% business rate rise next year being confirmed in the Budget, which many have predicted could have serious consequences for investment and confidence. Either way, for many small businesses, and particularly smaller retail businesses, the outlook is uncertain and challenging.

At times like this, though, small business owners often look for those best positioned to provide business as well as financial advice. In the past, this may have been the bank manager or their local Business Link when was still operating, but times are, perhaps, beginning to change. In a recent online focus group with small business owners from around the country, when we asked who they would turn to for help and advice about running their business, more than half of our participants cited a small business organisation or network, but nearly a third also mentioned their accountant.

First and foremost your accountant’s role should be to keep your business meeting its financial obligations, whether that is paying appropriate income tax and National Insurance, ensuring you register for and keep track of VAT and paying corporation tax as a limited company, all of which can become increasingly complex and time consuming as your business grows unless managed efficiently. This process, for example, will likely include improving your record keeping so, for example, you can legitimately claim business expenses that can be used to reduce your profits and your tax liability.  Having some form of accounting software or some form of mechanism to keep up to date records of your financial affairs is a major step towards avoiding those sorts of issues. Your accountant will help you with this.  As your business grows and you become an employer, your accountant can look after payroll and even more advanced financial reporting whilst you focus on further growth.

This recognition that an accountant can be valuable for more than just the figures, though, is an interesting development. It points to the genuine contribution that an accountant can make in providing sound support, including general as well as financial guidance, that frees you up to concentrate on your core activity. The accountant’s position as a critical friend can be more than helpful. Moreover, with many small businesses likely to be using a small practice or an individual accountant, each of which is likely to be a small business themselves, owners seem to recognise that their accountant is likely to identify with many of the challenges they are facing or will have experienced them vicariously through the raft of other companies with which they work.

Whatever view you have of how the next few years will play out, one thing is certain and that is that nothing is certain! Now might be the time to find an accountant with whom you feel you can build a relationship and ask them discuss your short, medium and longer term hopes and plans. Ask them to explain how they could support you through the next phase in your business journey.

For for further information you can contact us on info@stanleycarter.co.uk or check our website www.stanleycarter.co.uk