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This version of this statute is extracted from the UK Statute Law Database (SLD). It is not necessarily in the form in which it was originally enacted but is a revised version, which means that any subsequent amendments to the text and other effects are incorporated with annotations.
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Societies: accounts and audit, etc
3. General provisions as to accounts and balance sheets of societies
6. Provisions as to resolutions relating to appointment and removal of auditors
9. Auditors’ report and right of access to books and to attend and be heard at meetings
9A. Duty to obtain accountant’s reports where section 4 applied
9C.Registrar’s power to require accounts for past years to be audited
Societies registered under the Act of1896: valuations and rules
An Act to make further provision with respect to the accounts of friendly societies and industrial and provident societies and the auditing of those accounts, and with respect to the rules and valuations of friendly societies.
[26th July 1968]
C1Act modified (19.12.1993) by S.I. 1993/3245, reg. 7, Sch.
C2Power to modify Act conferred by Credit Unions Act 1979 (c. 34, SIF 55:3), s. 32(2)(c)
C3Act: power to transferfunctions (25.2.2001) by 2000 c. 8, ss. 338(1)(c), 339; S.I. 2001/516, art. 2(a), Sch. Pt. 1
Act: power to amend conferred (8.9.2002) by 2002 c. 20, ss. 2, 4(2)
I1Act wholly in force at Royal Assent
(1)Every society shall—
(a)cause to be kept proper books of account with respect to its transactions and its assets and liabilities, and
(b)establish and maintain a satisfactory system of control of its books of account, its cash holdings and all its receipts and remittances.
(2)For the purposes of paragraph (a) of the preceding subsection proper books of account shall not be taken to be kept with respect to the matters mentioned in that paragraph if there are not kept such books as are necessary to give a true and fair view of the state of the affairs of the society and to explain its transactions.
(1)Any book of account to be kept by a society may be kept either by making entries in bound books or by recording the matters in question in any other manner.
(2)Where any such book of account is not kept by making entries in a bound book but by some other means, the society shall take adequate precautions for guarding against falsification and facilitating its discovery.
(1)Every revenue account of a society shall give a true and fair view—
(a)if it deals with the affairs of the society as a whole, of the income and expenditure of the society as a whole, or
(b)if it deals with a particular business conducted by the society, of the income and expenditure of the society in respect of that business,
for the period to which the account relates.
(2)Every society shall, in respect of each year of account, cause to be prepared either—
(a)a revenue account which deals with the affairs of the society as a whole for that year, or
(b)two or more revenue accounts for that year which deal separately with particular businesses conducted by the society.
(3)In a case falling within paragraph (b) of the last preceding subsection, without prejudice to the application of subsection (1)(b) of this section to each revenue account dealing with a particular business conducted by the society, the revenue accounts in question, when considered together, shall give a true and fair view of the income and expenditure of the society as a whole for the year of account to which they relate.
(4)Every balance sheet of a society shall give a true and fair view as at the date of the balance sheet—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1 of the state of the affairs of the society.
(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F2
(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3
(7)If in relation to any revenue account, revenue accounts or balance sheet of a society a member of the committee of the society fails to take all reasonable steps to secure compliance—
(a)with the provision of subsection (1) or subsection (4) of this section which is applicable in that case, or
(b)in a case falling within subsection (2)(b) of this section, with subsection (3) of this section,
he shall be guilty of an offence . . . F4, unless he proves that he had reasonable grounds to believe, and did believe, that a competent and reliable person was charged with the duty of seeing that the relevant provision was complied with and was in a position to discharge that duty [F5and a person guilty of an offence under this section shall be liable on summary conviction to a fine not exceeding [F6level 5 on the standard scale].]
(8)In the case of a society to which this subsection applies, the preceding provisions of this section shall not have effect in relation to—
(a)any revenue account of that society for a period ending before the last day of the year of account in respect of which the provisions of section 4(1) or section 4(5) of this Act (as the case may be) first apply to that society; and
(b)any balance sheet of that society relating to its affairs as at a date before that day.
(9)The last preceding subsection applies in the case of any society which is registered . . . F1 under the Act of 1965 . . . F1 at the date of the commencement of this Act, or which is first registered . . . F1 on or after that date but before 1st January 1969.
F1Words repealed by Friendly Societies Act 1974 (c. 46), Sch. 11
F2S. 3(5) repealed (1.9.1996) by S.I. 1996/1738, arts. 1, 9(3)
F3Ss. 3(6), 4(3), 9(8), 11(4)(6)-(8), 16, 17(4), Sch. 1 paras. 1-8, Schs. 2, 3 paras. 5, 6 repealed by Friendly Societies Act 1974 (c.46), Sch. 11
F4Words repealed by Friendly Societies Act 1971 (c. 66), s. 11(5)(6) and S.I. 1971/1899, but not so as to affect the amount of the fine which may be imposed on conviction of an offence committed before 31.12.1971
F5Words substituted by Friendly Societies Act 1971 (c. 66), s. 11(5)(6) and S.I. 1971/1899, but not so as to affect the amount of the fine which may be imposed on conviction of an offence committed before 31.12.1971
F6Words substituted (E.W.S) by virtue of (E.W.) Criminal Justice Act 1982 (c. 48, SIF 39:1), ss. 38, 46 and (S.) Criminal Procedure (Scotland) Act 1975 (c. 21, SIF 39:1), ss. 289F, 289G
(1)A society shall not publish any revenue account or balance sheet unless it has been signed by the secretary of the society and by two members of the committee of the society acting on behalf of that committee.
(2)Where at the end of a society’s year of account no disapplication under section 4A(1) of this Act is in force in relation to the year, the society shall not publish a year end revenue account or balance sheet unless—
(a)it has been previously audited by the auditor or auditors last appointed to audit the accounts and balance sheet of the society, and
(b)it incorporates a report by the auditor or auditors stating whether in their opinion it complies with subsection (1) or, as the case may be, subsection (4) of section 3 of this Act.
(3)Where at the end of a society’s year of account a disapplication under section 4A(1) of this Act is in force in relation to the year and the society’s turnover in the preceding year of account exceeded £90,000, the society shall not publish a year end revenue account or balance sheet unless—
(a)it is one on which the society has obtained from a person appointed under subsection (2) of section 9A of this Act a report which meets the requirements of subsection (3) of that section, and
(b)it incorporates so much of the report as relates to it.
(4)Where at the beginning of a year of account (in this subsection referred to as “the current year of account") a society is subject to subsection (2) of this section in relation to the publication of a year end revenue account or balance sheet for the preceding year of account, it shall not publish any interim revenue account or balance sheet for the current year of account—
(a)if a disapplication under section 4A(1) of this Act is in force in relation to that year, unless it incorporates a report by an appropriate person stating whether in his opinion it complies with subsection (1) or (4), as the case may be, of section 3 of this Act, and
(b)if no disapplication under section 4A(1) of this Act is in force in relation to that year, unless paragraphs (a) and (b) of subsection (2) of this section are met in relation to it.
(5)Where at the beginning of a year of account (in this subsection referred to as “the current year of account") a society is subject to subsection (3) of this section in relation to the publication of a year end revenue account or balance sheet for the preceding year of account, it shall not publish any interim revenue account or balance sheet for the current year of account unless it incorporates a report by an appropriate person stating—
(a)whether, in his opinion, the revenue account or, as the case may be, the balance sheet, is in agreement with the books of account kept by the society under section 1 of this Act, and
(b)whether, in his opinion, on the basis of the information contained in those books of account, the revenue account or, as the case may be, the balance sheet complies with the requirements of this Act and the appropriate registration Act.
(6)Where a society’s year of account is one in relation to which a direction under section 9C of this Act has effect, the society shall not publish any year end or interim revenue account or balance sheet, unless it incorporates a report by the auditor or auditors appointed in pursuance of the direction stating whether in their opinion it complies with subsection (1) or (4), as the case may be, of section 3 of this Act.
(7)Subsection (3) of this section shall cease to apply in relation to a year of account if a direction under section 9C of this Act is made in relation to it.
(8)Section 9B of this Act shall apply in relation to a person appointed for the purposes of subsection (4) or (5) of this section as it applies in relation to a person appointed under section 9A(2) of this Act.
(9)In subsection (4) of this section, references to a disapplication under section 4A(1) of this Act being in force in relation to a year of account shall, where the year of account has ended, be construed as references to a disapplication under that provision being in force at the end of the year.
(10)Subject to subsection (11) of this section, in subsections (4) and (5) of this section, references to an appropriate person are to a person who is—
(a)a qualified auditor for the purposes of this Act, and
(b)not ineligible by virtue of section 8(1) of this Act to be appointed as auditor of the society.
(11)In relation to the application of subsection (4) of this section to a society which—
(a)was an exempt society in respect of the preceding year of account, and
(b)appointed persons who were not qualified auditors to audit its accounts and balance sheet for that year,
subsection (10) of this section shall, if the year is not one in relation to which the [F2Authority] has given a direction under section 4(7)(a) of this Act, have effect with the omission of paragraph (a).
(12)In this section—
“interim balance sheet", in relation to a year of account, means a balance sheet relating to the position at a time in the year other than the end;
“interim revenue account", in relation to a year of account, means a revenue account for any period falling within the year of account, other than one ending at the end of the year;
“turnover" has the same meaning as in section 4A of this Act;
“year end balance sheet", in relation to a year of account, means a balance sheet relating to the position at the end of the year; and
“year end revenue account", in relation to a year of account, means a revenue account for the year or for any period falling within the year of account and ending at the end of the year.]
F1S. 3A inserted (1.9.1996) by S.I. 1996/1738, arts. 1, 9(3)
F2Word in s. 3A(11) substituted (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(1), Sch. 3 Pt. III para. 247 (subject to savings and transitional provisions in art. 13(3)); S.I. 2001/3538, art. 2(1)
(1)Subject to the following provisions of this section [F1and section 4A(1) of this Act], every society shall in each year of account beginning on or after 1st January 1969 appoint a qualified auditor or qualified auditors to audit its accounts and balance sheet for that year.
(2)Subsection (1) of this section shall not apply to any society . . . F2 if—
(a)the receipts and payments of that society in respect of the preceding year of account did not in the aggregate exceed £5,000;
(b)the number of its members at the end of that year did not exceed five hundred; and
(c)the value of its assets at the end of that year did not in the aggregate exceed £5,000.
(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3
(4)A society to which by virtue of subsection (2) . . . F2 of this section subsection (1) of this section does not apply in respect of any year of account is in this Act referred to as an exempt society in respect of that year of account.
(5)Subject to any direction given by the [F4Authority] under the next following subsection, every society which is an exempt society in respect of the current year of account shall in that year appoint at its option either—
(a)a qualified auditor or qualified auditors, or
(b)two or more persons who are not qualified auditors,
to audit its accounts and balance sheet for that year.
(6)The [F4Authority] may give a direction in the case of any particular society which is an exempt society in respect of the current year of account requiring it to appoint a qualified auditor to audit its accounts and balance sheet for that year.
(7)The [F4Authority] may give a direction in the case of any particular society which was an exempt society in respect of any year of account before the year of account in which that direction is given and did not appoint a qualified auditor or qualified auditors to audit its accounts and balance sheet for that year—
(a)requiring it to appoint a qualified auditor to audit those accounts and that balance sheet, and
(b)in a case where that society has sent to [F5the Authority] its annual return for that year before the date of the direction, requiring it after its accounts and balance sheet have been audited by a qualified auditor to send to [F5the Authority] within three months from receipt of the direction a further annual return complying with the requirements of this Act and . . . F2 of section 39 of the Act of 1965 (other than that as to time of sending).
(8)Regulations made by the F6. . .Treasury may—
(a)substitute for any sum or number for the time being specified in subsection (2) of this section . . . F2 such sum, number . . . F2 as may be specified in the regulations; and
(b)prescribe what receipts and payments of a society shall be taken into account for the purposes of those subsections.
F1S. 4(1) words inserted (1.9.1996) by S.I. 1996/1738, arts. 1, 9(5)
F2Words repealed by Friendly Societies Act 1974 (c. 46), Sch. 11
F3Ss. 3(6), 4(3), 9(8), 11(4)(6)-(8), 16, 17(4), Sch. 1 paras. 1-8, Schs. 2, 3 paras. 5, 6 repealed by Friendly Societies Act 1974 (c.46), Sch. 11
F4Words in s. 4(5)(6)(7) substituted (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(1), Sch. 3 Pt. III para. 248(a) (subject to savings and transitional provisions in art. 13(3)); S.I. 2001/3538, art. 2(1)
F5Words in s. 4(7)(b) substituted (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(1), Sch. 3 Pt. III para. 248(b) (subject to savings and transitional provisions in art. 13(3)); S.I. 2001/3538, art. 2(1)
F6Words in s. 4(8) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(1)(2), Sch. 3 Pt. III para. 248(c), Sch. 4 (subject to savings and transitional provisions in art. 13(3)); S.I. 2001/3538, art. 2(1)
C1S. 4 extended (1.10.1996) by 1996 c. 52 s. 7, Sch. 1 Pt. III para. 17; S.I. 1996/2402, art. 3
S. 4 applied (1.11.2001) by 2001 asp 10, s. 63, Sch. 7 para. 14; S.S.I. 2001/336, art. 2(3), Sch. Pt. II (subject to transitional provisions in art. 3)
C2S. 4(1) extended by Housing Associations Act 1985 (c. 69, SIF 61), s. 25
C3S. 4(8): transfer of functions (1.12.2001) by virtue of S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. I (with art. 5); S.I. 2001/3538, art. 2(1)
(1)Subject to subsections (3) and (4) of this section, a society may disapply section 4 of this Act in relation to any year of account beginning on or after the day on which the Deregulation (Industrial and Provident Societies) Order 1996 comes into force if—
(a)the value of its assets at the end of the preceding year of account did not in the aggregate exceed £1,400,000, and
(b)its turnover for that year did not exceed £350,000
(2)The power conferred by subsection (1) of this section shall be exercisable by resolution passed at a general meeting at which—
(a)less than 20 per cent. of the total votes cast are cast against the resolution, and
(b)less than 10 per cent. of the members of the society for the time being entitled under the society’s rules to vote cast their votes against the resolution.
(3)Subsection (1) of this section shall not apply to a society which—
(a)is a credit union within the meaning of the Credit Unions Act 1979,
(b)is registered in the register of housing associations maintained by the Housing Corporation [F2or the Secretary of State],
[F3(ba)is registered in the register of social landlords maintained under section 57 of the Housing (Scotland) Act 2001 (asp 10),]
(c)is, or has, a subsidiary,
(d)prepares accounts under the Insurance Accounts Directive (Miscellaneous Insurance Undertakings) Regulations 1993 F4, or
(e)holds, or has, at any time since the end of the preceding year of account, held, a deposit F5. . ., other than a deposit in form of withdrawable share capital.
(4)The [F6Authority] may by notice to a society disapply subsection (1) of this section in relation to the year of account of the society in which the notice is given.
(5)Where a society exercises the power conferred by subsection (1) of this section, the disapplication shall cease to have effect if, at any time before the end of the year of account to which it relates—
(a)the society becomes one to which subsection (3) of this section applies, or
(b)the [F6Authority] gives the society notice under subsection (4) of this section.
(6)In the case of a society which is a charity within the meaning of the Charities Act 1993 F7, or a recognised body as defined by section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 F8, subsection (1) of this section shall have effect with the substitution for paragraph (b) of—“
(b)its gross income for that year did not exceed £250,000."
(7)For a period which is a society’s year of account, but not in fact a year, the maximum figure in subsection (1)(b) of this section (including that provision as it has effect by virtue of subsection (6) of this section) shall be proportionately adjusted.
(8)In this section, “turnover", in relation to a society, means the amounts derived from the provision of goods and services falling within the society’s activities, after deduction of—
(a)trade discounts,
(b)value added tax, and
(c)any other taxes based on the amounts so derived.]
[F9(9)In subsection (3), the reference to a deposit must be read with—
(a)section 22 of the Financial Services and Markets Act 2000;
(b)any relevant order under that section;
(c)Schedule 2 to that Act.]
F1S. 4A inserted (1.9.1996) by S.I. 1996/1738 arts. 1, 8(1)
F2Words in s. 4A(3)(b) substituted (1.11.2001) by 2001 asp 10, s. 112, Sch. 10 para. 2(a); S.S.I. 2001/336, art. 2(3), Sch. Pt. II Table (subject to transitional provisions in art. 3)
F3S. 4A(3)(ba) inserted (1.11.2001) by 2001 asp 10, s. 112, Sch. 10 para. 2(b); S.S.I. 2001/336, art. 2(3), Sch. Pt. II Table (subject to transitional provisions in art. 3)
F4S.I. 1993/3245.
F5Words in s. 4A(3)(e) repealed (1.12.2001) by S.I. 2001/3649, arts. 1, 184(2)
F6Words in s. 4A(4)(5)(b) substituted (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(1), Sch. 3 Pt. III para. 249 (subject to savings and transitional provisions in art. 13(3)); S.I. 2001/3538, art. 2(1)
F71993 c. 10.
F81990 c. 40.
F9S. 4A(9) inserted (1.12.2001) by S.I. 2001/3649, arts. 1, 184(3)
Friendly and Industrial and Provident Societies Act 1968