Business, Legal & Accounting Glossary
Abridged accounts are general purpose financial statements intended for both company members and publication.
Under the EU Accounting Directive (2014), Abridged Accounts are a simplified form of annual accounts that in certain circumstances may be filed by an entity qualifying as a small company. The new rules allow certain, detailed types of financial information to be excluded from both a company’s balance sheet (statement of financial position) and the profit and loss account (income statement), but only in the event that’s been unanimously agreed upon by shareholders.
In the UK the new regime applies to the financial period beginning on or after the 1st January 2016.
Abridged accounts are accounts that cover an entire accounting period. However, they do not contain certain detailed financial information.
Abridged accounts can be used to present summary data or to support a proposal. If you are a small company in the UK you may also opt to file abridged accounts with Companies House.
Abridged accounts may be filed with Companies House if you satisfy 2 of the following criteria:
Abridged accounts afford a company the opportunity to provide less detailed accounts to Companies House, showing a much simpler profit and loss account and balance sheet. There will be fewer ‘lines’ and so less detail. However, companies are still obligated to show a ‘fair and true’ representation of their accounts. A small company is able to abridge either or both of the balance sheet and profit and loss account. If it is decided to abridge the balance sheet then it will not contain notes of what the main headings (creditors, debtors etc) consist of, however, any movement on each kind of fixed asset will be shown. If they decide to file an abridged profit and loss account it will not show the cost of sales and turnover and will begin at the gross profit instead. However, it should be noted, that to do so permission must be granted by each individual shareholder every year.
In the event that it is decided to file abridged accounts, these will be entered into the public record and disseminated amongst the shareholders in lieu of full accounts.
Abridged accounts must have all of the following in them to qualify with Companies House, or you may face a fine or penalty:
To file your abridged accounts in the UK you can choose one of the following three options:
If you need support or guidance, you can see accounts guidance here.
Please note: as of 2016 you can no longer file abbreviated accounts with Companies House. In terms of for the public record, abbreviated accounts are no longer an acceptable accounting practice after 2016.
The notes that have been filed with the balance sheet and submitted as part of the abridged accounts show how much was distributed to the shareholders.
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This glossary post was last updated: 21st April, 2020 | 2,253 Views.