The legislative reform, which we've lobbied for over the last year, raises the threshold at which co-operative and community benefit societies are forced to conduct a full professional audit to a level equivalent to companies. The threshold moves from £5.6 million in turnover and £2.8 million in assets, to £10.2 million in turnover and £5.1 million in assets.
We welcome the changes, originally announced in the Spring Budget, and estimate the measure could save societies at the threshold between £5,000 and £10,000 a year in extra audit fees.
How and when will it happen?
The legislation will be laid before parliament before the end of 2017 with the new higher threshold coming into effect on 6 April 2018. This will be 'secondary legislation', subject to scrutiny by committee and will update Section 84 of the Co-operative and Community Benefit Societies Act.
This change will not affect charitable community benefit societies, credit unions or registered social landlords. The legislation does not apply to Northern Ireland.
What about charitable community benefit societies?
While we suggested to government that the legislation should update the audit threshold for charitable community benefit societies to make this level with charitable companies, it has decided not to do so, citing additional risks and complexities surrounding these organisations.
What about the auditors' report requirement?
Co-operatives UK has also been pressing for significant changes to the auditors' report' requirement for societies with a turnover over £90,000, which we know is most irksome. While HM Treasury officials agreed that changes were required, they took the view that this required primary legislation, which is simply not an option in their department at present. We will continue to lobby on this front.
What about Northern Ireland?
Prior to the dissolution of the Northern Ireland Assembly in March 2016, we secured commitments from MLAs and the Economy Minister Bell to explore further changes to the society legal framework in 2018, and began talks with officials in the Ministry for the Economy. By now we had hoped to be in detailed discussion with officials and MLAs regarding further improvements to society legislation in Northern Ireland. Unfortunately the ongoing delay in the resumption of power-sharing means no progress has been made and the way forward is currently unclear. We are currently seeking clarification from the Ministry for the Economy as to what the next steps should be.audit