43 What's the difference between private and public company reporting

A public corporation is a business whose securities are traded on the public stock exchanges, such as the New York Stock Exchange and Nasdaq. A private company is held solely by its owners and is not traded publicly. When the shareholders of a private business receive the periodical financial reports, they are entitled to assume that the company's financial statements and footnotes are prepared in accordance with GAAP. Otherwise the president of chief officer of the business should clearly warn the shareholders that GAAP have not been followed in one or more respects. The content of a private business's annual financial report is often minimal. It includes the three primary financial statements - the balance sheet, income statement and statement of cash flows. There's generally no letter from the chief executive, no photographs, no charts.

In contrast, the annual report of a publicly traded company has more bells and whistles to it. There are also more requirements for reporting. These include the management discussion and analysis (MD&A) section that presents the top managers' interpretation and analysis of the business's profit performance and other important financial developments over the year.

Another section required for public companies is the earnings per share (EPS). This is the only ratio that a public business is required to report, although most public companies report a few others as well. A three-year comparative income statement is also required.

Many publicly owned businesses make their required filings with the SEC, but they present very different annual financial reports to their stockholders. A large number of public companies include only condensed financial information rather than comprehensive financial statements. They will generally refer the reader to a more detailed SEC financial report for more specifics.

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UK Accounting Reference Dates For Private Limited Companies

When a private limited company is incorporated companies house advise the company of the accounting reference date and a set of financial accounts are required to be made up and submitted from the day of incorporation to this accounting reference date. The accounting reference date is set by companies house as the last day of the month 12 months after the date of incorporation.

For example a company registered on 7 January would have an accounting reference date of 31 January the following year. Financial accounts are required for the period from 7 January one year to the 31 January the following year.

The financial accounting period for a limited company which has been trading in previous years starts on the day after the accounting reference date and continues until the next accounting reference date. In the example above the final accounts including profit and loss account, balance sheet and notes to the accounts including audit report where required would be prepared from 1 February until 31 January.

The accounting reference date can be changed by a limited company by sending to companies house form 225. There is a time limit on when the form can be submitted which in any financial year is the day before the accounts are due for delivery to companies house.

There are a number of reasons why the directors of a limited company might wish to change its financial year end although in the vast majority of cases the financial year is not changed.

Common reasons for changing the financial year end date would be to bring the year end date into line with other business interests such as an associated company. Seasonal and trading factors may make one month end more appropriate or the company might wish more time to prepare a particular set of final accounts although it can be a problem if the date is changed more than once in a 5 year period.

A significant reason for changing the financial year end of a limited company would be to bring the company financial accounting period into line with the tax year as tax rules change from year to year and accounting and tax alignment simplifies the tax calculation as only one years tax rules would apply instead of two tax years rules when the tax year end is straddled.

For limited companies in the UK the practise in recent years has been for tax rules and capital tax allowances changes to be announced in the budget each year which is the third week of March and the tax rules to be applied from the 1 April the following year. An accounting year in line with the tax year end would then be 1 April to 31 March each year.

A new private company filing its first set of annual accounts must do so within 22 months of incorporation. In subsequent years the financial accounts need to be submitted to companies house within 10 months of the company accounting reference date. Companies house normally send a reminder of when the accounts need to be filed 6 to 8 weeks prior to the deadline date.

Companies house automatically impose an escalating scale of civil penalties on private companies for the late filing of the annual accounts as follows

Up to 3 months late the penalty fine is 100 pounds.

Over 3 months and up to 6 months the penalty fine is 250 pounds.

Over 6 months and up to 12 months the penalty fine is 500 pounds.

Over 12 months the penalty fine is 1000 pounds.

The accounting documents to be sent to companies house which are required to be prepared in a specific format and in addition to stating the registered office of the company and the company registration number for identification purposes must also send

Profit and loss account or income and expenditure account for a non profit organisation.

Balance sheet signed and dated by a company director stating the company asset and liabilities balances.

Directors report signed by a director or company secretary describing the companies activities and also including for companies not classified as small and exempt a business review of future performance.

Auditors report signed by the auditor unless the company is exempt from audit under the small companies exemption rules.

When a small private company submits abbreviated accounts and takes advantage of the exemptions then the accounts must also contain the statutory statements as notes to the accounts advising the basis and exemptions under which the annual accounts have been prepared.

Terry Cartwright, qualified accountant, designs UK Accounting Software that automates the Financial Accounts of private limited companies and produces a full set of Company Accounts bookkeeping and accounting spreadsheets

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Public Vs Private Accounting

Accounting is a hot major choice for college students today. Many students settle accounting as a major but are not certain which avenue of accounting they would like to proceed down. The two main sectors of accounting that one can decide from are public and private accounting. Public accountants are professionals who work for a particular accounting firm and encourage various clients in ranging fields. Private accountants, on the other hand, work as internal accountants for one company. Choosing between public and private accounting is not easy for young accounting majors but colorful your skill sets and having the accurate information can support in the process.



Public accounting is the first main sector of the profession. It is a sector of accounting where communication and kindly people skills are a must. Public accountants relieve a wide variety of clients; therefore, bright how to communicate properly with different people is valuable. wonderful grades are obviously necessary but accounting firms are starting to gawk more towards personality and customer service skills during the interview process.



A unusual graduate who decides on public accounting can resolve between a national, regional or local firm. There are many regional and local firms across the country but only four national firms. Pricewaterhousecoopers, Deloitte Touche Tohmatsu, Ernst & Young, and KPMG are considered the grand four and offer a range of services. These services include advisory, audit and assurance, and tax services. Working for a colossal four firm is big if you want top notch experience in the field of accounting. Also, belief on working with many other employees in gigantic groups. National and international depart is very approved while working for a substantial four firm if that interests you as well. The question for accountants is extremely high in today's world so landing an entry level station at one of the mammoth four firms is not easy.



A regional firm may suit you more if you want to quit local but do not want too shrimp of a firm. A popular regional firm may have two hundred employees working in auditing, tax services, business advisory and technology services. Professionals working for a regional firm will also benefit a wide range of clients. One work day may involve taking a physical inventory for a manufacturing firm while the next day you could be working on an audit for a service firm. A local firm, on the other hand, will usually have a exiguous number of employees that will concentrate on one residence of expertise. Again, people skills are highly indispensable for national, regional, and local public accountants. If you view on working in public accounting it is highly recommended you become a Certified Public Accountant (CPA) .



Public accounting is not for everyone with an accounting degree. Some people would be happier working for one particular company instead of serving various firms. These professionals are private accountants. You can work for a company in their internal accounting department or even climb the corporate ladder and become a controller for a company. Reporting and analyzing the companies financial records is the main component of private accounting. Budget planning is also a expansive allotment of the workload. A CPA license is also highly recommended if you resolve the private accounting path.



When choosing to work towards your accounting degree there is no distinct choice in becoming a public or private accountant. If you want to attend various clients and industries, public accounting is the road for you. If your looking to work for one particular company then private accounting may be the suitable option for you. You will first need to asses your skills and gape if they are better sterling for public or private accounting. Also, an internship is recommended before graduating. Having an internship will give you a better conception of working in public or private accounting before accepting a permanent job offer. Whichever career path is apt for you, public and private accounting can both be rewarding career choices.

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