Changes to Accounting and Auditing Requirements for Limited Liability Partnerships

SI 2005 No. 1989- The Limited Liability Partnerships (Amendments) Regulations 2005.

Recent changes to the accounting and auditing requirements in the Companies Act 1985 have now been reflected in the above regulations, and will affect Limited Liability Partnerships (LLP’s) from financial years beginning on or after 1 January 2005. This is a brief summary of those changes.

All LLP’s will have the option of preparing their individual accounts using International Accounting Standards (IAS) rather than UK GAAP, and will also have the option of preparing their consolidated accounts using IAS.

LLP’s that continue to prepare their accounts using UK GAAP will have a new accounting option to use fair value accounting for financial instruments, investment property and/or living plants and animals.

For LLP’s that continue to prepare their accounts using UK GAAP there are changes to the requirements in these areas:

• how items must be presented in the balance sheet and profit and loss account;
• disclosure of information on derivatives.

For LLP’s that have overseas interests, the current automatic three-month extension under section 244 of the Companies Act 1985 for laying and delivering accounts is repealed.

For parent LLP’s, there are changes to the requirements and options on consolidation.

For LLP’s that have their accounts audited, there are new requirements concerning the audit report.

A number of amendments have also been made in line with the package of reforms to corporate insolvency introduced by the Enterprise Act 2002. These are aimed at encouraging the rescue of viable businesses that get into financial difficulty.