January 2017 saw the issue of the final version of the new LLP SORP which is the final piece in the jigsaw for the new reporting regime in respect of LLPs. Recent UK GAAP changes include the withdrawal of the FRSSE and revisions to FRS 102 along with the extension of the micro-entity reporting regime (FRS 105) to LLPs. The disclosure and filing requirements of LLP law have also been revised, and in addition, the LLP PSC regulations have been issued.
This article summarises the impact of these changes for LLPs.
The new LLP SORP reflects a number of changes in the reporting environment for LLPs as well as some additional clarification on other areas:
- FRS 105 reporting for micro-entities. The limited and specific reporting requirements under FRS 105 have been determined as being outside the scope of the SORP as it is intended to be complementary to FRS 102 and not FRS 105.
- Withdrawal of the FRSSE, which is no longer available for accounting periods commencing on or after 1 January 2016.
- Reporting under FRS 102 1A. The new SORP reflects the disclosure requirements in section 1A and mandates only one additional disclosure being that in respect of where amounts due to members rank in relation to other creditors.
- Automatic division of profits. The SORP clarifies the accounting treatment in respect of profits divided automatically within the LLP.
- Statement of Changes in Equity - clarification that this is not required where there is no equity on the LLP's balance sheet.
The new SORP applies to accounting periods commencing on or after 1 January 2016 but can be early-adopted for accounting periods beginning on or after 1 January 2015.
Small LLP financial statements
Small LLPs have new options for the formats of their primary statements:
- 'Full' LLP law formats containing a greater degree of disclosure and analysis.
- 'Adapted' LLP law formats with certain minimum disclosures as set out in section 1A of FRS 102.
- 'Abridged' LLP law formats which include less information than the 'full' alternative. When abridged financial statements are prepared the designated members are required to also deliver to the Registrar a statement by the LLP that all of the members of the LLP have consented to the abridgement.
These financial statements must include a balance sheet, a profit and loss account and relevant notes.
Filed financial statements
The filing obligations of LLPs subject to the small LLPs regime have been amended to remove the option of filing abbreviated accounts. The new provisions permit a small LLP to remove the profit and loss account prior to filing, subject to satisfaction of certain other criteria and, where audited, it is no longer necessary to file the audit report itself although the notes must contain certain details in respect of the auditor and opinion.
The Limited Liability Partnerships (Register of People with Significant Control) Regulations 2016
These regulations were made on 15 March 2016 and predominantly came into force on 30 June 2016. These regulations specifically implement the 'PSC regulations' as applicable to LLPs. This legislation introduced a new requirement for LLPs to keep a register of people with significant control ('PSC register').
Mercia Specialist Assignment Manual
The latest version of the Mercia specialist assignment manual was issued in February 2017 and has been updated for the new reporting regime, including model accounts and checklists for LLPs which are eligible to prepare accounts as micro-entities as well as those applying FRS 102.
We are also offering a number of specialist courses on Understanding LLPs and Current Issues in LLPs in April and May 2017. Please visit our website for booking details.