There may be a hint of movement on a big disadvantage societies suffer compared with companies but we now need Government to act.
Debate was recently initiated by Christiana Dankwa on the Community Shares Google Group about this old problem as understood by accountants:
“On Friday, 13 January 2017 18:45:41 UTC, Christiana Dankwa wrote:
As I pick myself up from the floor and dust my self down, I bring you actual content on Societies from ICAEW. Unfortunately, if doesnt actually tell you what Societies should use.
Still: http://www.icaew.com/en/groups-and-networks/local-groups-and-societies/london-ds/london-accountant/features/jan17-pennyI’m inclined to wonder:1) Why does this advice differ from that urged by CSU in the Dec 2016 practiioner meet-up slides?2) Why didnt “the legislation” (which relates to FRS 105) include reference to Societies? (By which I really mean, did anyone from Coops UK or FCA contribute to the relevant consultations when they were open and if so were they just ignored anyway?)
I will write to the ICAEW (again!) and ask for clarification on this point FRS 102/FRS 105 point….”
I pointed out on the Google Group that this is a problem with the legislation:
“This short paper I did for Radical Routes back in July 2015 may cast some light on this.My brief PDF document highlights the different rules about the need for an audit at all and the circumstances in which something less than full audited accounts is allowed. There is a big discrepancy because societies registered under CCBSA 2014 are rarely wholly exempt from audit while small private companies often are. I haven’t checked the current limits for companies but the limits and rules for societies in the PDF are still correct.
Accounting standards cannot override the legislation. The CCBSA 2014, despite its date, only consolidated and did not change, the law that applies to societies. Within those legal limits, accounting standards apply but legislation is needed to change the basics.
Any society with a turnover of more than £90k has to provide an “accountant’s report” which is a less stringent audit but has to be done by a qualified auditor. At over £5.6m turnover it needs a full audit. For charitable societies the threshold is lower – £250K gross income triggers a full audit. The FCA can also insist on a full audit even if the accountant’s report option is available to the society and has been chosen by it (that requires a members’ resolution with less than 10% of total membership and less than 20% of those voting opposing it). The opt out from a full audit has to be repeated by members’ resolution every year it is to apply. The FCA can require an audit for previous years retrospectively. Section 85 sets out what the accountant’s report has to do.“