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Written question asked by Baroness Bowles of Berkhamsted (Liberal Democrat) on Tuesday, 25 February 2025, in the House of Lords. It was due for an answer on Tuesday, 11 March 2025. It was answered by Baroness Jones of Whitchurch (Labour) on Monday, 10 March 2025 on behalf of the Department for Business and Trade.

Company Accounts

Question

To ask His Majesty's Government why the Financial Reporting Council’s Guidance on the Going Concern Basis of Accounting and Related Reporting (including Solvency and Liquidity Risks), published on 25 February, does not mention that section 836 of the Companies Act 2006 requires the numbers in the "relevant accounts" to establish whether or not a distribution is lawful.

Answer

The Financial Reporting Council (FPR) 'Guidance on the Going Concern Basis of Accounting and Related Reporting (including Solvency and Liquidity Risks)' (the guidance) is non-mandatory and non-statutory guidance issued by the FRC to support its public interest outcomes. The guidance was not developed to address matters relating to distributable profits.

Section 393 of the Companies Act 2006 is referenced in the guidance as one of the relevant requirements. Accounting standards set the threshold for departing from the going concern basis of accounting. As noted in paragraph 3.3 of the guidance, there are often realistic alternatives to liquidation or cessation of operations.

Secondary information

Type
Written question
Reference
HL5235
Session
2024-26
Related items
Company Accounts
Wednesday, 26 March 2025
Written questions
House of Lords
Accountancy
Tuesday, 25 March 2025
Written questions
House of Lords
Grouped for answer
Yes
Subjects
Company accounts
Legislation
Companies Act 2006
Link
View this Written question on www.parliament.uk