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Professional practices sector : current issues |
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Limited Liability Partnerships
Many partnerships are reviewing the possibility of converting to LLP status. The LLP is a highly flexible and tax transparent body, which provides its members increased protection. Partnerships that incorporate as LLPs will be required to comply with the accounts and audit provisions of the Companies Act 1985 for private limited companies. Consequently a LLP’s financial statements are required to give a true and fair view and may require an audit.
FRS 5 - Application Note G - Revenue Recognition
Professional practices will generally recognise a value for work-in-progress in their year end accounts. Prior to the issue of Application Note G this was generally recorded at the lower of cost and net realisable value, with the exception of long term work-in-progress, where an element of profit was included if the outcome of the project could be assessed with reasonable certainty. Following the issue of Application Note G, which is applicable for accounting periods ending on or after 23rd December 2003, many commentators have expressed the view that firms will be required to take account of all work undertaken in the year whenever a right to consideration has been earned. Taken to its logical conclusion for many professional practices this would replace work-in-progress with debtors, with the attributable value including profit and taking account of equity partner time. This could create a one-off taxable profit with very significant cash flow implications.
The required treatment under this Application Note is by no means clear - expect considerably more press coverage.
Money Laundering
- Knowing your client
- Reporting to NCIS
- Tipping off
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Professional practices sector links |
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