Legislation amending parts of the Co‑operative and Community Benefit Societies Act 2014 changed on the 6 April, writes Co‑operatives UK Governance Advisor Linda Barlow.
The Co‑operative and Community Benefit Societies Act 2014 (Amendments to Audit Requirements) Order 20181 means that more co‑operatives and communities benefit societies are able to disapply the requirement to appoint a qualified auditor to audit their accounts. Read on for what this could mean for your co-op, and download our free resource (at the bottom of this page) on audit requirements for co-ops.
What does this mean for co‑ops?
Previously, a co‑op or community benefit society could only disapply the requirement to appoint a qualified auditor if its assets in the previous year of account were less than £2.8m and turnover less than £5.6m. The new law increases these thresholds to £5.1m assets and 10.2m turnover, which brings society audit requirements in line with those for limited companies – potentially saving societies up to to £10,000 per year on audit fees.
Do the changes apply to all co‑ops?
No. The changes do not apply if your co‑op or community benefit society:
- Is exempt from the requirement to appoint an auditor under the 'small society exemption' then these thresholds remain unchanged. Our society audit guide provides more information on the requirement for small societies
- Has a provision in its rules that requires an auditor to be appointed. However, the rules can be amended to remove this requirement
- Has not passed the required resolution at a general meeting to disapply the requirement to appoint an auditor
- Is registered in Northern Ireland
There are also some specific co‑ops and community benefit society that must appoint an auditor. These are:
- Credit unions
- Scottish regulated housing associations
- Subsidiaries of other societies
- Societies with one ore more subsidiaries (whether those subsidiaries are companies or societies)
- Societies that hold 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)
- Charitable community benefit societies with assets of more than £5.1m and turnover more than £250,000
What does our co‑op need to do to take advantage of the audit changes?
If your co‑op meets the new financial thresholds in order to disapply the requirement to appoint an auditor you should:
- Check that the society is not one of those societies listed above that cannot disapply the audit requirement
- Review the society's rules to check whether the appointment of an auditor is required. If so, then take steps to amend the society's rules
- Pass the required resolution at a general meeting to disapply the requirement to appoint an auditor