Scots ICA warns of misleading accounts

Planned simplifications of the Companies Act designed to help small businesses could result in highly misleading company accounts, the Scots ICA has warned.

The proposals, outlined in a Department of Trade and Industry document, suggest that future unqualified auditors’ reports for company shareholders need not be included in the special auditor’s report in the accounts filed at Companies House.

But the institute wants details of fundamental uncertainty in the reports, such as pending significant legislation or the risk of company collapse, to be included in the auditor’s report on the filed accounts.

The institute’s business legislation committee convener Ken McHattie backed changes that would help small businesses, but said: ‘Under the proposals, the filed accounts and special auditor’s report would not indicate the existence of a fundamental uncertainty, and could, therefore, mislead suppliers, potential suppliers and lenders who may base judgements on these accounts.’

Proposed changes supported by the institute include enabling small companies to refer to one single Schedule for accounting requirements.