Small companies preparing accounts under FRS 102 Section 1A benefit from reduced disclosures, and micro-entities under FRS 105 need even fewer. Reduced does not mean optional: missing notes are one of the most common reasons accounts are not compliant, and the true and fair requirement means directors may need to say more than the minimum.
Mandatory notes for a small company (FRS 102 Section 1A)
The Companies Act and Section 1A require, among others:
- Accounting policies, including the basis of preparation and a statement of compliance with FRS 102 Section 1A
- Average number of employees during the year
- Fixed assets: movements in cost and depreciation (or revalued amounts) for each category
- Financial commitments, guarantees and contingencies not on the balance sheet, including pension commitments and commitments to group undertakings
- Advances, credits and guarantees to directors: amounts, interest rates, main conditions and amounts repaid
- Debts due after more than five years and any secured debts, with the nature of the security
- Exceptional items: amount and nature of items of exceptional size or incidence
- Post balance sheet events that are material and not reflected in the accounts
- Parent undertaking details, if the company is a subsidiary
- Going concern, where there are material uncertainties
The Companies Act 2006 small companies regulations set out the full statutory list.
Notes that are encouraged and often needed
Section 1A encourages further disclosures where they are relevant to a true and fair view. In practice these come up regularly:
- Related party transactions, especially with directors and their families or other companies they own
- Going concern commentary when the company has net liabilities
- Dividends paid or proposed
- Transition to the new FRS 102 lease model for periods beginning on or after 1 January 2026, where it changes the figures materially
Micro-entities (FRS 105)
A micro-entity’s accounts are presumed to give a true and fair view if they meet the minimum requirements, and directors are not required to add more. The balance sheet notes are limited to:
- advances and credits to directors;
- financial commitments, guarantees and contingencies.
Any additional information that is given must still be accurate. Micro-entities cannot revalue assets or use fair value accounting.
What is filed and what is not
Preparing a note and filing it are different questions. Small companies that fillet their accounts still deliver the notes relating to the balance sheet; the full set with the profit and loss account goes to members. Check what the filed copy will show before submission: see what your filed accounts show on the public register.
A quick review routine
- Run through the list against last year’s accounts and note anything new this year (loans to directors, new borrowings, a guarantee given).
- Agree each note to the ledger or a schedule.
- Ask the directors directly about commitments and guarantees; these rarely appear in the ledger.
- Check employee numbers against payroll.
For the frameworks behind these lists, see FRS 102 for UK SMEs and FRS 105 micro-entity accounts.