2.3 Audit requirements

An audit is an examination of an organisation’s financial statements to ensure that there are no material misstatements that might mislead readers of the accounts. Audit requirements for societies are different to those of limited companies so it is important that any appointed auditor or accountant is aware of the requirements under the Co-operative and Community Benefit Societies Act 2014 (CCBSA2014). 

Audit thresholds and requirements for societies varies depending on several factors as below. 

Most Co-operative and Community Benefit Societies have a rule enabling them to pass a resolution at a general meeting prior to the accounts being finalised, to disapply the requirement for a full professional audit, if, in the preceding year of account, their turnover is under £10.2 million and their gross assets are under £5.1m. 

A Charitable community benefit society cannot pass the resolution to waive the audit requirement if its gross income exceeded £250,000 in the previous year.

A society must have an audit if it is a parent, subsidiary, credit union or Scottish social landlord. 

If the society does not require a full professional audit, but their turnover is over £90,000 in the preceding year, they still require an accountant’s report submitted with their accounts. This report needs to confirm that the accounts agree with the accounting records, that they are prepared in accordance with the CCBSA2014, and that the requirements for audit exemption have been met. The accountant providing the accountant’s report needs to be a registered auditor. 

Unaudited accounts, verified by the directors, can be submitted if the turnover does not exceed £90,000. 

For more information on whether a society requires an audit or accountant’s report, please use the FCA’s Audit Decision Tool, or read Society Audit Requirements and Society Annual Returns.