Medium Company

The rules around the preparation of medium company abridged financial statements are essentially the same as they were under previous legislation with the exception that additional types of companies can now qualify as ‘medium’ companies. These are outlined in: Exclusions, exemptions and special arrangements..

Under Section 352 and 354, a company that is medium can prepare abridged financial statements which include an exemption from filing the following items:

  • The statutory financial statements (section 352(2)a)
  • The statutory auditor’s report (section 352(2)c)

 

If a medium company avails itself of the above exemptions, then it must annex to its annual return the following:

  • Abridged financial statements; and
  • A special auditors report prepared in accordance with section 356 (see below).

 

Content of medium company abridged financial statements:

The abridged financial statements of a medium company should be the same as the full statutory financial statements and therefore should include (at a minimum):

  • Directors’ report;
  • Directors’ responsibility statement;
  • Special auditor’s report;
  • Abridged profit and loss account (see table below for details):
  • Balance sheet;
  • Accounting policies; and
  • Notes to the financial statements

 

As noted, the profit and loss account can be abridged as follows:

Medium company abridged financial statements – exemptions from disclosing: Section(s)
‘Turnover’, ‘cost of sales’ and ‘other operating income’ may be extracted and combined and presented as one item under the heading ‘gross profit or loss’ (assumes Format 1 is applied) 354(5)
The notes to the financial statements, in relation to the above items, may also be abridged such that they are not separately identified in the notes. This also means that the information required to present particulars of turnover (Schedule 3, paragraph 65) need not be disclosed. 354(6)