Abridged accounts – What are abridged accounts?
Abridged accounts are a simplified form of a small company’s annual accounts. When completing abridged accounts, certain financial details that are normally present in full accounts can be omitted from the company’s balance sheet and profit and loss statement if this has already been agreed upon by the company’s shareholders.
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Abridged accounts can be presented in a number of different scenarios, for example, when a company wants to present a summary of their finances or support an initial proposal for funding.
What information is included in abridged accounts?
If you do not want to indicate what the net profit of your company is, you need to file abridged accounts. Abridged accounts disclose less information than full accounts as they exclude a breakdown of balance sheet items.
If accounts are abridged, they will be identified as such. A statement should be included that says something like, “members have consented to the abridgement of these accounts”.
All types of accounts, (micro-entity accounts, abridged accounts or full accounts) must file at least the balance sheet and any related notes. Abridged accounts must contain a simpler balance sheet and any accompanying notes. The balance sheet has to have the name of the director printed on it, along with their signature. A company may also choose to include a simplifier profit and loss account along with a copy of the director’s report.
However, unlike full accounts, abridged accounts are not required to include a breakdown of fixed assets, debtors and creditors. As there isn’t a breakdown of creditors, the account’s corporation tax figure is not disclosed. Therefore, it’s not possible to estimate the net profit of a company using abridged accounts.
It's also possible for abridged accounts to be filleted. What this means is that the director’s report and the profit and loss report can be removed from the Companies House version if the company’s accounts. In this filleted version of accounts, Companies House will then only receive a balance sheet with reduced account disclosures and it won’t have profit and loss pages.
When are you allowed to file abridged accounts?
As a small company, you can file abridged accounts if you meet at least two of the following criteria:
- Your turnover is less than £10.2 million
- The total of your balance sheet is less than £5.1 million
- You don’t have an average number of employees greater than 50.
Importantly, you’re only allowed to file an abridged version of your accounts if all shareholders have agreed. Only after each member has given their explicit consent, can Companies House be informed and abridged accounts can be filed. It must be noted that consent must be given each year.
Why would you file an abridged account?
Filing an abridged account may be an advantage for a business: they can choose what financial information they make publicly accessible. However, just because a company chooses not to disclose all financial information, doesn’t mean the information given is not a fair and accurate reflection of the company’s finances.