Financial Statements and Auditing

Company accounts are prepared according to accounting standards adopted by the Accounting Standards Board in England and Wales. Companies conducting business in the Isle of Man are required to keep books of account.

Current accounting records must show all transactions changing the financial position of the company. Each transaction must be supported by a document of verification. All accounting records must be kept for ten years. A parent company must prepare consolidated accounts for the group. Assets must be stated at the lower of cost and net realisable value (the sales value less estimated sales costs). Fixed assets should be stated at cost or valuation in respect of investment properties.

The financial year usually covers twelve months. However, the financial year may be extended beyond or reduced below twelve months in some circumstances.

The Companies Acts require Isle of Man companies to prepare financial statements to the end of the financial year (less prescriptive rules exist for NMVs). In general, the accounts must be audited and submitted to members for their approval at the annual general meeting of the members. However, certain categories of companies (not including companies entitled to carry on banking, investment business, insurance business or to act as an insurance manager) may, if their constitutions permit, make their accounts exempt from the requirement of audit.

The Companies Acts specify the form and content of accounts. Accounts for a partnership may follow any format which is in accord with generally accepted accounting practices.