Changes to audit requirements for registered societies

On 6 April 2018 new legislation comes into effect amending parts of the Co-operative and Community Benefit Societies Act 2014. The changes amend the levels at which a society must appoint a qualified auditor to audit their accounts.

Some societies registered under the Co-operative and Community Benefit Societies Act 2014 can currently disapply the requirement to appoint a qualified auditor to audit their accounts.

This can be done where the assets in the previous year of account were below the value of £2.8m; and the turnover was below £5.6m.

From 6 April 2018 these thresholds change to:

  • £5.1m assets; and
  • £10.2m turnover.

These changes come from The Co-operative and Community Benefit Societies Act 2014 (Amendments to Audit Requirements) Order 2018.

Societies the changes don’t apply to

Some societies’ rules require audited accounts. They are still bound by these rules and must follow them.

Also, these changes don’t apply to the following types of society, who must still appoint a qualified auditor to audit their accounts:

  • credit unions
  • a Scottish regulated housing association
  • a subsidiary of another society
  • a society with one or more subsidiaries (whether those subsidiaries are companies or societies)
  • a society that holds a deposit or has done so at any time since the end of the preceding year of account (unless the deposit was withdrawable share capital)

The full extent of these changes doesn’t apply to societies that are charities. For these societies the assets threshold increases to £5.1m; but the turnover threshold stays at £250,000.

Taking advantage of the changes

From 6 April 2018, if:

  • none of the above applies to your society
  • the value of your assets in your previous year of account was below £5.1m and
  • your turnover in the previous year of account was below £10.2m

then you will be able to vote each year to disapply the requirement to appoint a qualified auditor.

A general meeting of the society must pass a resolution to disapply the requirement to appoint a qualified auditor. You can find more information about passing a resolution at paragraph 7.32 of our guidance.

Guidance on audit requirements

Our guidance covers audit requirements for societies from paragraph 7.18 on page 44 to paragraph 7.43 on page 48.

From 6 April 2018, you should note that our guidance is out of date because of these legislative changes. In particular:

  • at paragraph 7.31, the figures provided in the table for ‘non-charity’ societies are modified from:
    • £2.8m assets to £5.1m assets; and
    • £5.6m turnover to £10.2m turnover
  • at paragraph 7.31, the figure provided in the table for ‘charity’ is modified from:
    • £2.8m assets to £5.1m assets
    • the turnover threshold remains at £250,000

The same applies to paragraph 7.42 of the guidance.

We are considering amending our guidance to reflect these changes.