EXPLANATORY MEMORANDUM TO THE FRIENDLY AND INDUSTRIAL AND PROVIDENT SOCIETIES ACT 1968 (AUDIT EXEMPTION)

EXPLANATORY MEMORANDUM TO THE FRIENDLY AND INDUSTRIAL AND PROVIDENT SOCIETIES ACT 1968 (AUDIT EXEMPTION) (AMENDMENT) ORDER 2006 2006 No. 1. This explanatory memorandum has been prepared by Her Majesty’s Treasury and is laid before Parliament by Command of Her Majesty. 2. Description 2.1 This statutory instrument will raise the threshold above which non-charitable Industrial and Provident Societies (IPSs) are required to appoint an auditor to audit their end of year accounts and balance sheets to £5.6m turnover and £2.8m balance sheet total, in line with the existing thresholds for non-charitable companies. It will also raise the asset level to £2.8m for charitable societies, whilst leaving the turnover amount at £250,000. 3. Matters of special interest to the Joint Committee on Statutory Instruments 3.1 None. 4. Legislative Background 4.1 Section 4(1) of the Friendly and Industrial and Provident Societies Act 1968 (“FIPSA”) imposes on IPSs an obligation to appoint a qualified auditor to audit their end of year accounts and balance sheet. This requirement is limited by section 4A of that Act (which was inserted into that Act by S.I. 1996/1738) by disapplying the requirement in relation to non-charitable IPSs whose asset value is more than £1,400,000 and whose annual turnover is more than £350,000. In relation to charitable societies the asset figure is the same as for non-charitable societies, but the turnover figure is £250 ...