THE AUDIT REQUIREMENTS OF A SOCIETY REGISTERED UNDER THE FRIENDLY SOCIETIES ACT 1974 OR THE FRIENDLY AND INDUSTRIAL AND PROVIDENT SOCIETIES ACT 1968.
1 Your responsibilities as officers
1.1 As officers of the society, you are required to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the society and of the profit or loss of the society for that period. In preparing those financial statements, you are required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the society will continue in business.
1.2 You are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the society and to enable them to ensure that the financial statements comply with the Friendly Societies Act 1974/Friendly and Industrial and Provident Societies Act 1968* (the Act).
1.3 You are responsible for safeguarding the assets of the society and hence for taking reasonable steps to ensure the society’s activities are conducted honestly and for the prevention and detection of fraud and other irregularities.
1.4 You are responsible for ensuring that the society complies with laws and regulations applicable to its activities, and for establishing arrangements designed to prevent any non-compliance with laws and regulations and to detect any that occur.
1.5 Where audited information is published on the society’s website or by other electronic means, it is your responsibility to advise us of any intended electronic publication before it occurs and to ensure that any such publication properly presents the financial information and auditor’s report. We reserve the right to withhold consent to the electronic publication of our report if it or the financial statements are to be published in an inappropriate manner.
1.6 It is your responsibility to ensure there are controls in place to prevent or detect quickly any changes to that information. We are not required to review such controls nor to carry out ongoing reviews of the information after it is first published. The maintenance and integrity of the society’s website is your responsibility and we accept no responsibility for changes made to audited information after it is first posted.
2 Our responsibilities as auditors
2.1 Our legal and professional duty is to make a report to the members stating whether, in our opinion, the financial statements of the society which we have audited give a true and fair view of the state of the society’s affairs, and of the profit or loss for the year, and whether they have been properly prepared in accordance with the Friendly Societies Act 1974/Friendly and Industrial and Provident Societies Act 1968*. In arriving at our opinion we are required by law to consider the following matters, and to report on any in respect of which we are not satisfied:
- whether proper accounting records have been kept by the society and proper returns adequate for our audit have been received from branches not visited by us;
- whether a satisfactory system of control has been established and maintained over the society’s books of account, cash holdings and all its receipts and remittances;
- whether the society’s balance sheet and income and expenditure account are in agreement with the accounting records and returns;
- where the society prepares more than one fund account, that each such account and all fund accounts in aggregate give a true and fair view;
- whether we have obtained all the information and explanations which we think necessary for the purpose of our audit; and
- whether the information in the officers’ report is consistent with that in the audited financial statements.
2.2 As noted above, our report will be made solely to the society’s members, as a body, in accordance with Section 38/Section 9* of the Friendly Societies Act 1974/Friendly and Industrial and Provident Societies Act 1968*. Our audit work will be undertaken so that we might state to the society’s members those matters we are required to state to them in an auditor’s report and for no other purpose. In those circumstances, to the fullest extent permitted by law, we will not accept or assume responsibility to anyone other than the society and the society’s members as a body, for our audit work, for the audit report, or for the opinions we form.
2.3 In addition, we have a professional duty to report if the financial statements do not comply in any material respect with Financial Reporting Standards or Statements of Standard Accounting Practice, unless in our opinion non-compliance is justified in the circumstances. In determining whether any departure is justified we will consider:
(a) whether the departure is required in order for the financial statements to give a true and fair view; and
(b) whether adequate disclosure has been made concerning the departure.
2.4 Our professional duties also include:
(a) incorporating in our report a description of the officers’ responsibilities for the financial statements, where the financial statements or accompanying information do not include such description; and
(b) considering whether other information in documentation containing the financial statements is consistent with the audited financial statements.
3 Scope of audit
3.1 Our auditing procedures will be carried out in accordance with the International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board, and will include such tests of transactions and of the existence, ownership and valuation of assets and liabilities as we consider necessary.
3.2 We will ascertain the accounting systems in order to assess their adequacy as a basis for the preparation of the financial statements and to establish whether the society has maintained proper accounting records. We will need to obtain relevant and reliable evidence sufficient to enable us to draw reasonable conclusions there from.
3.3 The nature and extent of our tests will vary according to our assessment of the society’s accounting and internal control systems, and may cover any aspects of the business’s operations. We shall report to the management any significant weaknesses in, or observations on, the society’s systems that come to our attention of which we believe the officers should be made aware. Any such report may not be provided to any third party without our prior written consent. Such consent will only be granted on the basis that such reports are not prepared with the interests of any party other than the members in mind and that we therefore neither have nor accept any duty or responsibility to any other party as concerns the reports.
3.4 The responsibility for safeguarding the assets of the society and for the prevention and detection of fraud, error and non-compliance with law or regulations rests with the management. However, we will plan our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities, fraud or non-compliance with law or regulations, but our examination should not be relied upon to disclose all such material misstatements or frauds, errors or instances of non-compliance that might exist.
3.5 As part of our normal audit procedures, we may request you to provide formal representations concerning certain information and explanations we receive from you during the course of our audit. In particular, where we bring misstatements in the financial statements to your attention that are not adjusted, we shall require written representation of your reasons.
3.6 To enable us to conduct a review of your financial statements, which constitutes part of our audit, we will request sight of any documents or statements, which will be issued with the financial statements.
3.7 Once we have issued our report we will have no further direct responsibility in relation to the financial statements for that financial year. However, we expect that you will inform us of any material event occurring between the date of our report and that of the annual general meeting which may affect the financial statements. We are entitled to attend all general meetings of the society, and to receive notice of all such meetings.
And if applicable
3.8 We appreciate that the present size of your business renders it uneconomic to create a system of internal control based on the segregation of duties for different functions within each area of the business. In the running of your society we understand that the officer(s) is/(are) closely involved with the control of the society’s transactions. In planning and performing our audit work we shall take account of this supervision.