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LLP Reporting Changes

Since 2012, the new UK GAAP (Generally Accepted Accounting Practice in the UK) financial reporting framework has been a significant point of discussion for accounting professionals and firms. However, it was only in 2016 that the new regime became compulsory for all UK Limited companies for the first time and now, it is the turn of Limited Liability Partnerships (LLPs) to reconsider the way they present their financial accounts and reports, as the new revised changes implemented by the CCAB (Consultative Committee of Accountancy) come into effect.

These revisions focus on making amendments to the current financial reporting framework, standardising the process for both LLPs and companies. With the new legislative changes, small LLPs have been granted more diversity with their financial reporting. Where previously small LLPs reported under the FRS101/102 regime, meaning they would have to disclose full accounts regardless of their business size, the new legislative change offers both more options and early adoption procedures. On the other hand, medium sized LLPs will no longer be able to file abbreviated accounts – and for large LLPs, the revisions are unlikely to have any effect.

Furthermore, a new revised statement of recommended practice (SORP) issued by the CCAB highlights fundamental changes and revisions to the methods and practices used by medium-sized LLPs – and expects tremendous impact on small and ‘micro’ LLPs.  These new regulations now allow smaller LLPs to adopt FRS 102 Section 1A – Small Entities and FRS 105 depending on the size of their business, therefore reducing the administrative burden imposed and enabling them to be more flexible with the preparation and publication of their financial reports.

In addition, there have been changes to the qualifying criteria for small LLPs applying for FRS 102 Section 1A, as well as the introduction of new ‘micro-entity’ accounting standards for ‘very small’ LLPs. The FRS 102 for small entities framework offers only simpler and more straightforward disclosure requirements – but no simplifications in measurement and recognition.  As for the new ‘micro-entity’ accounting regime for very small LLPs, it contains significant simplifications in comparison to the FRS 102 requirements – and is deemed to give a true and fair perspective of an account.

In essence, small and micro-sized LLPs now have a variety of reporting options and frameworks at their disposal in regards to their financial reporting activity - all of which offer some respite from extensive reporting procedures.

Undoubtedly, ample preparation for the facilitation of these changes is fundamental for both accounting software providers and reporting professionals. But even more so, the regulatory changes to reporting requirements offer accounting firms and reporting professionals an opportunity to provide a consultative service, using their experience of managing limited companies with the framework to inform LLPs who are slowly embracing these changes. 

To learn more about the LLP reporting changes and regulatory shifts – as well as prepare your accountancy firm, click here to download our introductory eBook to LLP Reporting Changes.

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