Question:
A client who is audit exempt and preparing accounts under FRS102A is looking for any exemptions possible with regards disclosure of directors remuneration on the grounds that it commercially sensitive.
Is there anything we can do?
Answer:
The requirement to disclose directors’ rem is driven by company law, rather than by FRS102 section 1A, and so isn’t covered by the reduced disclosure provisions in section 1A.
S305 requires disclosure of directors’ remuneration, and goes on to give the detail about what exactly needs to be disclosed, including pension costs, compensation for loss of office etc. This is a mandatory section, with no exemptions for small companies. The only exemption available is where the company qualifies as micro, in which case, under s305(14) it is exempt from the requirements of s305.
Unless the company qualifies as micro, then it must make the disclosures – there is no “commercial sensitivity” exemption.
As they are not audited, there is no obligation on you to sign off in a report that they have complied with all the requirements of company law (in an audit report, you’d be opining specifically on compliance with this section of the Act). However, it remains a requirement of the directors to prepare accounts that give a true and fair view (s289), and that are compliant with the Act, which requires including this disclosure. Failure to do that could constitute a category 2 offence (s291(9)), so the directors may wish to take legal advice in this area before issuing financial statements without the disclosure.