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Building Societies Act 1986

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Auditors and audit of accountsU.K.

77 Auditors: appointment, tenure F1... , etc.U.K.

(1)Every building society shall at each annual general meeting appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting.

[F2(2)Schedule 11 to this Act has effect as regards the appointment, resignation and removal of auditors.]

[F3(3)Appointment as auditor of a building society is an appointment as a statutory auditor to which the provisions of Part 42 of the Companies Act 2006 apply.]

78 [F4Auditor’s report] .U.K.

(1)The [F5auditor] of a building society shall make a [F6written ] report to the members on the annual accounts which are to be laid before the society at the annual general meeting during [F7his] tenure of office.

(2)The [F8auditor’s report] shall F9. . . be open to inspection by any member [F10at the annual general meeting of the building society].

(3)The [F11auditor shall, in his] report under subsection (1) above, also make a report to the members on—

(a)the annual business statement, and

(b)the directors’ report,

in so far as subsection (7) below requires [F12him] to do so.

[F13(3A)The auditor's report must include—

(a)the identity of the building society whose annual accounts are the subject of the audit,

(b)a description of the annual accounts that are the subject of the audit (including the period covered by those accounts),

(c)a description of the financial reporting framework that has been applied in the preparation of those accounts, and

(d)a description of the scope of the audit identifying the auditing standards in accordance with which the audit was conducted.

[F14(4)The report must clearly state the opinion of the auditor as to whether the accounts—

(a)give a true and fair view—

(i)in the case of an individual balance sheet, of the state of affairs of the society as at the end of the financial year,

(ii)in the case of an individual income and expenditure account, of the income and expenditure of the society for the financial year, and

(iii)in the case of group accounts, of the state of affairs as at the end of the financial year and the income and expenditure for the financial year of the society and the subsidiary undertakings dealt with in the group accounts, so far as concerns members of the society,

(b)have been properly prepared in accordance with the relevant financial reporting framework, and

(c)have been prepared in accordance with the requirements of this Act (and, where applicable, Article 4 of the IAS Regulation).]

(4A)The auditor's [F15report] must—

(a)be either unqualified or qualified,

(b)include a reference to any matters to which the auditor wishes to draw attention by way of emphasis without qualifying the [F16report],

(c)include a statement on any material uncertainty relating to events or conditions that may cast significant doubt about the building society's ability to continue [F17to adopt the going concern basis of accounting], and

(d)identify the auditor's place of establishment.]

(6)If the [F18auditor’s report] includes a qualification of [F18his opinion] that the annual accounts give a true and fair view of the matters specified in subsection [F19(4)(a)] above, [F20subsection (8) of section 76 extends] also to the [F18auditor’s report].

[F21(7)The auditor's report, in so far as it deals with the documents specified in subsection (3) above, must—

(a)state whether, in his opinion, based on the work undertaken in the course of the audit—

(i)the documents have been prepared so as to conform to the requirements of, or made under, sections 74 and 75 respectively,

(ii)the information given in the annual business statement gives a true representation of the matters in respect of which it is given, and

(iii)the information given in the directors' report for the financial year for which the accounts are prepared is consistent with those accounts,

(b)state whether, in the light of the knowledge and understanding of the building society and its environment obtained in the course of the audit, the auditor has identified material misstatements in the directors' report, and

(c)if applicable, give an indication of the nature of each of the misstatements referred to in paragraph (b).]

(8)The [F22auditor’s report] on the annual business statement shall not deal with any matters which, by virtue of section 74(6), are not to be the subject of report under this section.

(9)The [F23auditor] of a building society shall, as regards the statement of particulars of transactions falling within section 65 which the society is to make available for "inspection by members under section 68(3), examine the statement before it is made available to members and make a report to the members on it; and the report shall be annexed to the statement before it is so made available.

(10)The [F24auditor’s report] under subsection (9) above shall state whether in [F25his opinion] the statement contains the particulars required by section 68; and where [F25his opinion] is that it does not, [F26he shall include in his] report, so far as [F27he is] reasonably able to do so, a statement giving the requisite particulars.

[F28(11)Where more than one person is appointed as an auditor—

(a)all the persons appointed must jointly make a report under this section and the report must include a statement as to whether all the persons appointed agree—

(i)on the matters contained in the report, and

(ii)on the statements and indications given under subsection (7); and

(b)if all the persons appointed cannot agree on—

(i)the matters contained in the report, or

(ii)on the statements and indications given under subsection (7),

the report must include the opinions of each person appointed and give reasons for the disagreement.]

Textual Amendments

F9Words in s. 78(2) repealed (11.1.1996) by S.I. 1995/3233, art. 6(a)

F10Words in s. 78(2) inserted (11.1.1996) by S.I. 1995/3233, art. 6(b)

F14S. 78(4) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(2)(a)

F15Word in s. 78(4A) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(2)(b)(i)

F16Word in s. 78(4A)(b) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(2)(b)(ii)

F17Words in s. 78(4A)(c) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(2)(b)(iii)

F19Word in s. 78(6) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(2)(c)

Modifications etc. (not altering text)

C1S. 78 restricted (1. 1. 1993) by S.I. 1992/359, reg. 9(4) (with reg. 2(2))

[F2978A Signature of auditors' reportU.K.

(1)The auditor’s report must state the name of the auditor [F30 (or, where more than one person is appointed as auditor, all of their names) ] and be signed and dated.

(2)Where the auditor is an individual, the report must be signed by him.

F31(2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Where the auditor is a firm, the report must be signed by the senior statutory auditor in his own name, for and on behalf of the auditor.

[F32(4)Where more than one person is appointed as auditor, the report must be signed by all those appointed.]

Textual Amendments

F31S. 78A(2A) omitted (with effect in accordance with reg. 1(4) of the amending S.I.) by virtue of The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(3)(a)

F32S. 78A(4) inserted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(3)(b)

78B.Senior statutory auditorU.K.

(1)The senior statutory auditor means the individual identified by the firm as senior statutory auditor in relation to the audit in accordance with the standards or guidance mentioned in section 504(1) of the Companies Act 2006.

(2)The person identified as senior statutory auditor must be eligible for appointment as auditor of the building society in question (see Chapter 2 of Part 42 of the Companies Act 2006).

(3)The senior statutory auditor is not, by reason of being named or identified as senior statutory auditor or by reason of his having signed the auditor’s report, subject to any civil liability to which he would not otherwise be subject.

78C.Names to be stated in copies of auditor’s report filed or publishedU.K.

(1)The copy of the auditor’s report sent F33... under section 81, and every copy of the auditor’s report that is published by or on behalf of the society, must—

(a)state the name of the auditor and (where the auditor is a firm) the name of the person who signed it as senior statutory auditor, or

(b)if the conditions in section 78D (circumstances in which names may be omitted) are met, state that a resolution has been passed and notified F33... in accordance with that section.

[F34(1A)If more than one [F35person] is appointed as auditor, the reference in subsection (1)(a) to the name of the auditor is to be read as a reference to the names of all the auditors.]

(2)For the purposes of this section a building society is regarded as publishing the report if it publishes, issues or circulates it or otherwise makes it available for public inspection in a manner calculated to invite members of the public generally, or any class of members of the public, to read it.

(3)If a copy of the auditor’s report is sent to the [F36FCA] or published without the statement required by this section, an offence is committed by—

(a)the society, and

(b)every officer of the society who is in default.

(4)A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

78D.Circumstances in which names may be omittedU.K.

(1)[F37An ] auditor’s name and, where the auditor is a firm, the name of the person who signed the report as senior statutory auditor, may be omitted from—

(a)the copy of the report sent F38... under section 81, and

(b)published copies of the report,

if the following conditions are met.

(2)The conditions are that the building society—

(a)considering on reasonable grounds that statement of the name would create or be likely to create a serious risk that the auditor or the senior statutory auditor, or any other person, would be subject to violence or intimidation, has resolved by an ordinary resolution that the name should not be stated, and

(b)has given notice of the resolution to the [F39FCA and, if the society is a PRA-authorised person, the PRA] , stating—

(i)the name of the society,

(ii)the financial year of the society to which the report relates, and

(iii)the name of the auditor and (where the auditor is a firm) the name of the person who signed the report as senior statutory auditor.]

79 [F40Auditor’s duties and powers] .U.K.

(1)It is the duty of the [F41auditor] of a building society in preparing [F42his] report to the members under section 78, to carry out such investigations as will enable [F43him] to form an opinion as to the following matters—

(a)whether [F44adequate] accounting records have been kept under section 71,

F45(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)whether the annual accounts are in agreement with the accounting records.

[F46(2)If the auditor is of the opinion that—

(a)[F47adequate] accounting records have not been kept under section 71, or

(b)the annual accounts are not in agreement with the accounting records,

the auditor must state that fact in his report.]

(3)Every auditor of a building society has—

(a)a right of access at all times to the accounting and other records of the society and all other documents relating to its business, and

(b)a right to require from the officers of the society such information and explanations as he thinks necessary for the performance of the duties of the auditors.

(4)Where a building society has a [F48connected undertaking], then—

(a)if the [F48connected undertaking] is a body corporate incorporated in any part of the United Kingdom, it is the duty of the [F48connected undertaking] and [F49its auditor] to give to [F50the society’s auditor] such information and explanation, and such access to documents, as [F51that auditor] may reasonably require for the purposes of [F52his duties as auditor] of the society;

(b)in any other case, it is the duty of the society, if required by [F53its auditor] to do so, to take all such steps as are reasonably open to it to obtain from the [F48connected undertaking] such information and explanation and such access as are mentioned above.

[F54(5)Subsection (4) above applied as regards any body associated with the society which is not a [F55subsidiary undertaking] as it applies as regards a [F55subsidiary undertaking] of the society.]

(6)If the [F56auditor fails] to obtain all the information and explanations and the access to documents which, to the best of [F57his] knowledge and belief, are necessary for the purposes of [F57his] audit, [F58he] shall state that fact in [F57his] report.

[F59(6A)Where more than one person is appointed as auditor, the report must include a statement as to whether all the persons appointed agree on any statements given under subsections (2) and (6) and, if they cannot agree on those statements, the report must include the opinions of each person appointed and give reasons for the disagreement.]

(7)The [F60auditor] of a building society have the right—

(a)to attend any general meeting of the society, and to receive all notices of and other communications relating to any general meeting which any member of the society is entitled to receive, and

(b)to be heard at any meeting which [F61he attends] on any part of the business of the meeting which concerns [F62him as auditor].

(8)If a building society or other body corporate fails to comply with subsection (4) above, the society or other body shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer of the society or, as the case may be, of the other body who is also guilty of the offence; and if an auditor fails without reasonable excuse to comply with paragraph (a) of that subsection he shall be liable, on summary conviction, to such a fine.

(9)If a person who is an officer of a building society or of a body which is a [F63connected undertaking of] the society knowingly or recklessly makes to the [F64auditor] of that or another society or body a statement which—

(a)conveys or purports to convey any information or explanation which the [F65auditor requires, or is entitled to require, as auditor] of the society or other body, as the case may be, and

(b)is false or misleading in a material particular,

that person shall be liable—

(i)on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both; and

(ii)on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or both.

Textual Amendments

F44Word in s. 79(1)(a) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(5)

F45S. 79(1)(b) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F47Word in s. 79(2)(a) substituted (with effect in accordance with reg. 1(4) of the amending S.I.) by The Statutory Auditors and Third Country Auditors Regulations 2017 (S.I. 2017/516), regs. 1(2), 2(5)

F48Words in s. 79(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 34(1); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xxi)

F54S. 79(5) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 46(2), 47(3), Sch. 7 para. 34(2), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(y)(z)(xxi)(cc)(xi)

F55Words in ss. 71-82 (Pt. VIII) substituted by S.I. 1991/1729, art. 3.

F63Words in s. 79(9) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 34(3); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xxi)

Modifications etc. (not altering text)

C2S. 79(1)(2) modified (temp.) by S.I. 1986/2168, art. 12(2)(e)

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