ICAEW has welcomed efforts to improve the quality, value and integrity of information on the Companies House register and stressed that reform in this area must be a priority.
In its response to the BEIS consultation on future filing requirements at Companies House, ICAEW says that improving the value of information would both benefit the economy and help to combat economic crime.
In particular, ICAEW welcomes the longer-term ‘file once with government’ ambition, believing that it will reduce the burden on business and improve efficiency for both companies and government. Similarly, ICAEW supports the goal of introducing mandatory digital filing, with tagging, and greater checks of information filed.
However, ICAEW has raised concerns about the prospect of shortened filing deadlines and the requirement for companies to file the most detailed set of accounts prepared. It urged BEIS to proceed with caution on these issues.
“While we recognise the merits of ensuring financial information is as current as possible, we believe this must be balanced with ensuring the information is of high quality,” ICAEW’s response says. “Although technology advancements have streamlined certain aspects of accounts preparation, the process of preparing and auditing accounts still requires significant levels of human resource,” ICAEW warns.
Sally Baker, technical manager in ICAEW’s Financial Reporting Faculty, said further consideration to the practical impacts of shortening filing deadlines was needed. “We’re keen to make sure that any changes to existing requirements or any new measures introduced are proportionate, particularly in light of the range of challenges that businesses are facing at the moment,” Baker said. ICAEW is urging BEIS to carry out and publish careful cost-benefit analysis of these proposals.
Despite improvements in the filing regime for smaller companies over recent years, ICAEW supports a review of the filing requirements for these companies. In particular, ICAEW says consideration could be given to removing the option to file abridged accounts and also to the filing processes for dormant companies.
However, ICAEW believes a more fundamental review of the reporting regimes in UK company law and their associated reporting requirements is needed. “As well as a review of the regimes for small and micro companies, we would welcome a broader review of the reporting regimes and their associated eligibility criteria. For example, are the current criteria of turnover, number of employees and balance sheet total appropriate criteria, and are the thresholds set at the right level?” Baker said.
The response also encourages the government to consider ways in which they can support company directors in understanding the various eligibility criteria and related reporting requirements. “The current rules are located across several places within legislation which exacerbates their complexity and can result in elements being overlooked,” Baker added.
BEIS will be continuing to engage with stakeholders as they develop their proposals. As part of this outreach, Companies House will be presenting a webinar, open to all ICAEW members, to provide some background to the proposals and outline their current thinking based on the responses received to the consultation. The live webinar on 15 April, hosted by ICAEW’s Financial Reporting Faculty, will also offer participants the opportunity to ask questions.
Further resources:
- Register for the Financial Reporting Faculty’s live webinar with Companies House taking place on 15 April at 10am BST. Open to all ICAEW members, Financial Reporting Faculty members and Faculties Online subscribers.
- Read ICAEW’s full response to the consultation Corporate Transparency and Register Reform: improving the quality and value of financial information on the UK companies register published by the Department for Business, Energy and Industrial Strategy in December 2020: Rep 27/21 Improving the quality and value of financial information on the UK companies register
ICAEW Know-How from the Corporate Reporting Faculty
This guidance is created by the Corporate Reporting Faculty – recognised internationally as a leading authority on financial reporting. The Faculty formulates ICAEW policy on financial reporting issues and makes submissions to standard setters and other external bodies. Join the Faculty to access exclusive technical resources and practical know-how.
