Legalize / United Kingdom / Statutory-Instrument

The Building Societies (Accounts and Related Provisions) Regulations 1992

Type Statutory-Instrument

Publication 1992-02-17

State In force

Department Queen's Printer of Acts of Parliament

Source legislation.gov.uk

PDF Download

articles Not indexed

Reform history JSON API

(c) where the acquisition method of accounting has been adopted, the book values immediately prior to the acquisition, and the fair values at the date of acquisition, of each class of assets and liabilities of the undertaking or group acquired, in tabular form, including a statement of the amount of any goodwill or negative consolidation difference arising on the acquisition, together with an explanation of any significant adjustments made;

(d) where the merger method of accounting has been adopted, an explanation shall be given of any significant adjustments made in relation to the amounts of the assets and liabilities of the undertaking or group acquired, together with a statement of any resulting adjustment to the consolidated reserves (including the restatement of opening consolidated reserves).

(3) In ascertaining for the purposes of subparagraph (2)(b), (2)(c) and (2)(d) the profit or loss of a group, the book values and fair values of assets and liabilities of a group or the amount of the assets and liabilities of a group, the set-offs and other adjustments required by this Schedule in the case of the annual accounts of a group accounts society shall be made.

11

(1) There shall be stated in a note to the accounts the cumulative amount of goodwill resulting from acquisitions in that and earlier financial years which has been written off.

(2) That figure shall be shown net of any goodwill attributable to subsidiary undertakings disposed of prior to the balance sheet date.

12

Where during the financial year there has been a disposal of a subsidiary undertaking or group which significantly affects the figures shown in the annual accounts of a group accounts society, there shall be stated in a note to the accounts—

(a) the name of that undertaking or, as the case may be, of the parent undertaking of that group, and

(b) the extent to which the profit or loss shown in the group accounts is attributable to profit or loss of that subsidiary undertaking or group. 13.The information required by paragraphs 10, 11 or 12 need not be disclosed with respect to a subsidiary undertaking which—

(a) is established under the law of a country outside the United Kingdom, or

(b) carries on business outside the United Kingdom,

if in the opinion of the directors of the society the disclosure would be seriously prejudicial to the business of that subsidiary undertaking or to the business of the society or any of its subsidiary undertakings and the Commission agrees that the information should not be disclosed.

14

For the purposes only of paragraphs 9, 10, 12 and 13, a “group” is a “parent undertaking” and its “subsidiary undertakings” as defined by section 258 of the Companies Act 1985, where the parent undertaking is a subsidiary undertaking of the society.

Minority interests

15

(1) Under item 15 in Part II of Schedule 1 shall be shown the amount of any profit or loss on ordinary activities attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the society and its subsidiary undertakings.

(2) Under item 22 in Part II of Schedule 1 shall be shown the amount of any profit or loss on extraordinary activities attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the society and its subsidiary undertakings.

(3) Under Liability item 20 in Part II of Schedule 2 shall be shown the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the society and its subsidiary undertakings. Interests in subsidiary undertakings excluded from consolidation. 16.The interest of the society in subsidiary undertakings excluded from consolidation under Regulation 4(5), and the amount of income or expenditure attributable to such an interest, shall be shown in the consolidated balance sheet or, as the case may be, in the consolidated income and expenditure account by the equity method of accounting (and this shall include dealing with any goodwill arising in accordance with paragraphs 8 to 10 and 12 of Schedule 7).

Foreign Currency Translation

17

(1) Any difference between:

(a) the amount included in the consolidated balance sheet for the previous financial year with respect to the group’s interest in any undertaking included in the consolidation or in any associated undertaking, together with the amount of any transactions undertaken to cover any such interest; and

(b) the opening amount for the financial year in respect of the group’s interest in such undertakings and in respect of any such transactions

arising as a result of the application of paragraph 31 of Schedule 7 may be credited to (where (a) is less than (b)), or (as the case may be) deducted from (where (a) is greater than (b)), the consolidated general reserve.

(2) Any income and expenditure of subsidiary undertakings and associated undertakings in a foreign currency may be translated for the purposes of the consolidated income and expenditure account at the average rates of exchange prevailing during the financial year.

SCHEDULE 5 — NOTES TO ANNUAL ACCOUNTS

Accounting policies

1

(1) There shall be stated the accounting policies (including such policies with respect to the depreciation and diminution in value of the assets of the society) adopted by the society in determining the amounts to be included in respect of items shown in the income and expenditure account, the balance sheet and the statement of the source and application of funds.

(2) It shall be stated whether the accounts have been prepared in accordance with applicable accounting standards; particulars of any material departure from these standards and the reasons for such departure shall be given. Sums denominated in foreign currencies 2. Where any sums originally denominated in foreign currency have been brought into account under any items shown in the balance sheet, income and expenditure account or statement of source and application of funds, the basis on which those sums have been translated into sterling shall be stated.

Employees

3

(1) The following information shall be given with respect to the employees of the society—

(a) the average number of persons employed by the society in the financial year; and

(b) the average number of persons so employed within each category of persons employed by the society.

(2) The average number required by subparagraph (1)(a) or (b) shall be determined by dividing the relevant annual number by the number of complete calendar months in the financial year, and that relevant annual number shall be determined by ascertaining for each complete calendar month in the financial year—

(a) for the purposes of subparagraph (1)(a), the number of persons employed under contracts of service by the society in that month (whether throughout the month or not), and

(b) for the purposes of subparagraph (1)(b), the number of persons in each such category of persons so employed, and, in either case, adding together all the monthly numbers.

(3) In respect of all persons employed by the society during the financial year who are taken into account in determining the relevant annual number for the purposes of subparagraph (1)(a) there shall also be stated the aggregate amounts respectively of

(a) wages and salaries paid or payable in respect of that year to those persons,

(b) social security costs incurred by the society on their behalf, and

save in so far as those amounts or any of them are stated in the income and expenditure account.

(4) The categories of persons employed by the society by reference to which the number required to be disclosed by subparagraph (1)(b) is to be determined shall be such as to assist the assessment of the manner in which the society’s activities are organised.

Aggregate amount of directors' emoluments

4

(1) The aggregate amount of directors' emoluments shall be shown.

(2) In subparagraph (1), “directors' emoluments” means the emoluments paid to or receivable by any person in respect of

(a) his services as a director of the society, or

(b) his services while director of the society—

(i) as director of any of its associated bodies

(ii) otherwise in connection with the management of the affairs of the society or any of its associated bodies.

(3) There shall also be shown, separately, the aggregate amount within subparagraph 2(a) and 2(b)(i) and the aggregate amount within subparagraph 2(b)(ii).

(4) For the purposes of this paragraph the “emoluments” of a person include—

(a) fees and percentages,

(b) sums paid by way of expenses allowance (so far as those sums are chargeable to United Kingdom income tax),

(d) the estimated money value of any other benefits received by him otherwise than in cash, and emoluments in respect of a person’s accepting office as director shall be treated as emoluments in respect of his services as director.

Details of chairman’s and directors' emoluments

5

(1) The emoluments of the chairman shall be shown.

(2) Where there has been more than one chairman during the year, the emoluments of each shall be stated so far as attributable to the period during which he was chairman.

(3) The following information shall be given with respect to the emoluments of directors—

(a) There shall be shown the number of directors whose emoluments fell within each of the following bands— not more than £5,000, more than £5,000 but not more than £10,000, more than £10,000 but not more than £15,000, and so on.

(b) If the emoluments of any of the directors exceeded that of the chairman, there shall be shown the greatest amount of emoluments of any director.

(c) Where more than one person has been chairman during the year, the reference in paragraph (b) to the emoluments of the chairman is to the aggregate of the emoluments of each person who has been chairman, so far as attributable to the period during which he was chairman.

(d) The information required by paragraph (a) need not be given in respect of a director who discharged his duties as such wholly or mainly outside the United Kingdom; and any such director shall be left out of account for the purposes of paragraph (b).

(e) In this paragraph “emoluments” has the same meaning as in paragraph 4, except that it does not include contributions paid in respect of a person under a pension scheme.

Emoluments waived

6

(1) There shall be shown—

(a) the number of directors who have waived rights to receive emoluments in the present financial year or in the future which, but for the waiver, would have fallen to be included in the amount shown under paragraph 4(1) in the present annual accounts or in future annual accounts, and

(b) the aggregate amount of those emoluments.

(2) For the purposes of this paragraph it shall be assumed that a sum not receivable in respect of a period would have been paid at the time at which it was due, and if such a sum was payable only on demand, it shall be deemed to have been due at the time of the waiver.

Pensions of directors and past directors

7

(1) There shall be shown the aggregate amount of directors' or past directors' pensions.

(2) This amount does not include any pension paid or receivable under a pension scheme if the scheme is such that the contributions under it are substantially adequate for the maintenance of the scheme; but, subject to this, it includes any pension paid or receivable in respect of any such services of a director or past director as are mentioned in paragraph 4(2) whether to or by him or, on his nomination or by virtue of dependence on or other connection with him, to or by any other person. (3)The amount shown shall distinguish between pensions in respect of services as director, whether of the society or any of its associated bodies, and other pensions. (4) References to pensions include benefits otherwise than in cash and in relation to so much of a pension as consists of such a benefit references to its amount are to the estimated money value of the benefit.

(5) The nature of any such benefit as is mentioned in subparagraph (4) shall be disclosed.

Compensation to directors for loss of office

8

(1) There shall be shown the aggregate amount of any compensation to directors or past directors in respect of loss of office.

(2) This amount includes compensation received or receivable by a director or past director for—

(a) loss of office as director of the society, or

(b) loss, while director of the society or on or in connection with his ceasing to be a director of it, of—

(i) any other office in connection with the management of the society’s affairs, or

(ii) any office as director or otherwise in connection with the management of the affairs of any associated body of the society;

and shall distinguish between compensation in respect of the office of director, whether of the society or any of its associated bodies, and compensation in respect of other offices. (3)

(a) References to compensation include benefits otherwise than in cash; and in relation to such compensation references to its amount are to the estimated money value of the benefit.

(b) The nature of any such compensation shall be disclosed.

(4) References to compensation for loss of office include compensation in consideration for, or in connection with, a person’s retirement from office.

Sums paid to third parties in respect of directors' services

9

(1) There shall be shown the aggregate amount of any consideration paid to or receivable by third parties for making available the services of any person—

(a) as a director of the society, or

(b) while director of the society—

(i) as director of any of its associated bodies, or

(ii) otherwise in connection with the management of the affairs of the society or any of its associated bodies.

(a) The reference in subparagraph (1) to consideration includes benefits paid or receivable otherwise than in cash; and in relation to such consideration the reference to its amount is to the estimated money value of the benefit.

(b) The nature of any such consideration shall be disclosed.

(3) The reference in subparagraph (1) to third parties is to persons other than—

(a) the director himself or a person connected with him or a body corporate associated with him, and

(b) the society or any of its associated bodies.

Supplementary provisions regarding directors' emoluments

10

(1) The following applies with respect to the amounts to be shown under paragraphs 4, 7, 8 and 9.

(2) The amount in each case includes all relevant sums paid by or receivable from—

(a) the society, and

(b) the society’s associated bodies, and

except sums to be accounted for to the society or any of its associated bodies.

(3) The amount to be shown under paragraph 8 shall distinguish between the sums respectively paid by or receivable from the society, its associated bodies, and persons other than the society and its associated bodies.

(4) References to amounts paid to or receivable by a person include amounts paid to or receivable by a person connected with him or a body corporate associated with him (but not so as to require an amount to be counted twice).

11

(1) The amounts to be shown for any financial year under paragraphs 4, 5, 8 and 9 are the sums receivable in respect of that year (whenever paid) or, in the case of sums not receivable in respect of a period, the sums paid during that year.

(2) But where—

(a) any sums are not shown in a note to the accounts for the relevant financial year on the ground that the person receiving them is liable to account for them as mentioned in paragraph 10(2), but the liability is thereafter wholly or partly released or is not enforced within a period of 2 years; or

(b) any sums paid by way of expenses allowance are charged to United Kingdom income tax after the end of the relevant financial year,

those sums shall, to the extent to which the liability is released or not enforced or they are charged as mentioned (as the case may be), be shown in a note to the first accounts in which it is practicable to show them and shall be distinguished from the amounts to be shown apart from this provision.

12

Where the Chief Executive of the society is not also a director of the society, he shall be deemed, for the purposes of paragraphs 4 to 11 to be a director of the society. In such circumstances there shall be a note in the accounts specifying that the Chief Executive has been so deemed to be a director.

13

Regulation 5(2)(b) shall not apply to paragraphs 4 to 12.

Interpretation of provisions regarding directors' emoluments

14

(1) In paragraphs 4 to 13—

(a) references to services to an associated body of a society shall be taken to refer to services to a body which was an associated body of the society at the time at which the services were rendered, or, in the case only of paragraph 8, immediately before the director lost his office as director,

(b) “pension” includes any superannuation allowance, superannuation gratuity or similar payment,

(c) “pension scheme” means a scheme for the provision of pensions in respect of services as director or otherwise which is maintained in whole or in part by means of contributions, and

(d) “contribution”, in relation to a pension scheme, means any payment (including an insurance premium) paid for the purposes of the scheme by or in respect of persons rendering services in respect of which pensions will or may become payable under the scheme except that it does not include any payment in respect of two or more persons if the amount paid in respect of each of them is not ascertainable.

(2) In paragraphs 9 and 10, references to a person being “connected” with a director, and to a director “associated with” a body corporate, shall be construed in accordance with section 70 of the Act.

Other income and expenditure items

15

(1) In respect of interest receivable, the amount of interest derived from associated bodies shall be shown separately from interest derived from other sources.

(2) In respect of interest payable, the amount payable to associated bodies shall be shown separately.

(3) There shall be shown the amount charged in respect of sums payable in respect of the hire of plant, machinery, equipment, fixtures, fittings and vehicles.

(4) There shall be shown the amount of the remuneration of the auditors, including any sums paid by the society in respect of the auditors' expenses.

(5) There shall be shown the amount of any interest capitalised by the society in respect of development projects during the year, together with an indication of the amount and treatment of any related tax relief.

(a) Where any amount to be included in any of the items mentioned in paragraph (b) is material, particulars shall be given of such amounts together with an explanation of their nature.

(b) The items referred to in paragraph (a) are—

(i) in Part I of Schedule 1, items 4(a) to (c), 5(a) to (e), 15 and 16; and

(ii) in Part II of Schedule 1, items 4(a)

to (d), 5(a) to (e), 17 and 18.

(7) There shall be shown in a note, with respect to each of the items of income mentioned below and included in the income and expenditure account formats in Schedule 1, the amount of income in respect of that item attributable to each of the geographical markets in which the society has operated during the financial year—

(a) Item 1 in Parts I and II (Interest receivable and similar income)

(b) Item 4 in Parts I and II (Income from associated bodies)

(d) Item 5(c) in Parts I and II (Net profit or loss on financial operations) and

(e) Item 5(d) in Parts I and II (Other operating income)

(8) In analysing the source of any income for the purpose of subparagraph (7), the directors shall have regard to the manner in which the society’s activities are organised.

(9) For the purposes of subparagraph (7), markets which do not differ substantially from one another shall be treated as one market.

(10) Where the directors consider that the disclosure of information required by subparagraph (7) would seriously prejudice the interests of the society, they need not disclose such information, but the fact that any such information has not been disclosed must be stated.

(11) Any amounts charged to the income and expenditure account and representing costs, including interest payable, incurred during the year with respect to subordinated liabilities shall be stated.

(12) Any amounts charged to the income and expenditure account and representing costs, including interest payable, incurred during the year with respect to subscribed capital, shall be stated.

(13) Where management and agency services are provided by the society to third parties that fact shall be disclosed where the scale of such services is material in the context of the society’s business as a whole.

Taxation

16

(1) The basis on which the charge for United Kingdom corporation tax and deferred tax is computed shall be stated.

(2) Particulars shall be given of any special circumstances which affect liability in respect of taxation of profits, income or capital gains for the financial year or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

(3) The following amounts shall be stated—

(a) the amount of the charge for United Kingdom corporation tax;

(b) if that amount would have been greater but for relief from double taxation, the amount which it would have been but for such relief; and

(c) the amount of the charge for taxation imposed outside the United Kingdom on profits, income and (so far as charged to the income and expenditure account) capital gains.

(4) The amounts specified in subparagraph (3) shall be stated separately in respect of each of the amounts shown under items 13 and 18 in Part I of Schedule 1, and under items 13 and 20 in Part II of that Schedule.

Miscellaneous matters

17

(1) Where any amount relating to any preceding financial year is included in any item in the income and expenditure account, the effect of that inclusion shall be stated.

(2) The effect shall be stated of any transactions that are exceptional by virtue of size or incidence although they fall within the ordinary activities of the society.

Liquid assets

18

(1) The aggregate of amounts classifiable in the balance sheet as “loans and advances to credit institutions” shall be shown on the basis of their remaining maturity as follows:

(a) accrued interest

(b) amounts which are repayable on demand or are for an indeterminate period, being repayable upon seven days notice, and

(i) not more than three months,

(ii) more than three months but not more than one year,

(iii) more than one year but not more than five years, and

(iv) more than five years.

(2) The aggregate of amounts classifiable in the balance sheet as “debt securities” shall be shown on the basis of remaining maturity as follows—

(a) accrued interest,

(b) not more than one year,

(d) more than five years.

(3) For the purposes of subparagraph (1), where a loan or advance is repayable by instalments, each such instalment shall be treated as a separate amount.

Commercial Assets

19

(1) The aggregate of commercial assets in respect of Asset items 2, 3, 4(a), 4(b) and 4(c) in the balance sheet shall be shown on the basis of remaining maturity, as follows:—

(a) accrued interest,

(b) amounts which are repayable on demand or are for an indeterminate period, being repayable upon seven days notice, and

(i) not more than three months,

(ii) more than three months but not more than one year,

(iii) more than one year but not more than five years, and

(iv) more than five years.

(2) For the purposes of subparagraph (1), where a commercial asset is repayable by instalments, each such instalment shall be treated as a separate amount.

Provisions for bad and doubtful debts

20

(1) In respect of any provisions for bad and doubtful debts deducted from Asset items 2, 3, 4(a), 4(b) and 4(c) in Parts I and II of Schedule 2 and Asset item 5(a) in Part II of Schedule 2 there shall be shown the following information, in respect of each item—

(a) the amount of the provision as at the date of the beginning of the financial year and as at the balance sheet date respectively, showing separately—

(i) specific provisions for bad and doubtful debts, and

(ii) general provisions for bad and doubtful debts,

(b) any amounts transferred to or from each of the provisions referred to in paragraph (a) during the year, and

(2) For the purposes of subparagraph (1) “specific provisions” shall be any provisions determined by reference to particular advances or loans and all other provisions shall be “general provisions”.

Transferable securities

21

(1) In respect of each of Asset items 1(d) and 4(e) in the balance sheet there shall be shown the amount of transferable securities under those items, stating—

(a) the amounts of those which are listed and the amount of those which are unlisted; and

(b) the amounts of those which are listed on a recognised investment exchange, other than an overseas investment exchange, within the meaning of the Financial Services Act 1986[^f00024] and the amount of those listed on other exchanges.

(2) In the case of each amount shown in respect of listed securities, under subparagraph (1)(a), there shall also be given the aggregate market value of the securities if it differs from the amount shown.

(3) In respect of each of Asset items 1(d) and 4(e)(iii) in Part I of Schedule 2 and Asset items 1(d) and 4(e)(iv) in Part II of that Schedule there shall be given the amounts of—

(i) transferable securities included under those items and which are held as financial fixed assets, and

(ii) those transferable securities which are not so held, together with the criteria used by the directors of the society to distinguish between those held and those not held as financial fixed assets.

Mortgage finance rights

22

The criteria used by the directors of the society to distinguish between those mortgage finance rights held as liquid assets and those held as commercial assets shall be disclosed.

Investments in credit institutions

23

There shall be disclosed separately the amount of investments in credit institutions which are—

(a) shares in subsidiary undertakings, or

(b) participating interests.

Fixed assets

24

(1) In respect of any fixed assets included in any Asset item in the balance sheet the following information shall be given—

(a) the appropriate amounts in respect of those assets as at the date of the beginning of the financial year and as at the balance sheet date respectively; and

(b) the effect on any amount included in the item, in respect of those assets, of—

(i) any determination during that year of the value to be ascribed to any of those assets on any basis mentioned in paragraph 28 of Schedule 7,

(ii) acquisitions during that year of any fixed assets,

(iii) disposals during that year of any fixed assets, and

(iv) any transfers of fixed assets to and from the item during that year.

(2) The reference in subparagraph (1)(a) to the appropriate amounts in respect of any fixed assets (included in an Asset item) as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of fixed assets falling to be included under that item on either of the following bases, that is to say—

(a) on the basis of cost (determined in accordance with paragraphs 22 and 23 of Schedule 7)

(b) on any basis mentioned in paragraph 28 of Schedule 7,

(leaving out of account in either case any provisions for depreciation or diminution in value).

(3) In respect of any fixed assets included in any Asset item in the balance sheet—

(a) the cumulative amount of provisions for depreciation or diminution in value of those assets included under that item as at each date mentioned in subparagraph (1)(a),

(b) the amount of any such provisions made in respect of the financial year,

(c) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any of those assets, and

(d) the amount of any other adjustments made in respect of any such provisions during that year, shall be stated.

(4) Where any fixed assets of the society (other than listed investments) are included under any item shown in the society’s balance sheet at an amount determined on any basis mentioned in paragraph 28 of Schedule 7 the following information shall be given—

(a) the years (so far as they are known to the directors) in which the assets were severally valued and the several values; and

(b) in the case of assets valued during the financial year, the names of the persons who valued them, or particulars of their qualifications for doing so, and, whichever is given, the basis of valuation used;

(c) either separately in the balance sheet or in a note to the accounts, in the case of each balance sheet item affected, either

(i) the comparable amounts determined according to paragraphs 8 to 10 of Schedule 7, or

(ii) the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item.

(5) In subparagraph (4)(c), references in relation to any item to the comparable amounts determined as there mentioned are references to—

(a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to paragraphs 8 to 10 of Schedule 7; and

(b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to paragraphs 8 to 10 of Schedule 7.

(6) In relation to any amount which is or would but for Regulation 3 (4) be shown in respect of the item “land and buildings” in the balance sheet there shall be stated—

(a) how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure;

(b) how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease; and

(7) In any case where any goodwill which has been acquired is shown or included as an asset in the balance sheet the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed.

Other assets

25

Any amount classifiable among “other assets” in the balance sheet and falling due after more than one year from the balance sheet date shall be separately disclosed.

Retail funds and deposits

26

(1) The amounts shown in the balance sheet as “retail funds and deposits” shall be analysed for the total and for each sub division by lower case letters, as follows—

(a) accrued interest,

(b) amounts which are repayable on demand or are for an indeterminate period, being repayable upon seven days notice, and

(c) amounts repayable from the balance sheet date in the ordinary course of business and whether by virtue of the giving of a period of notice or otherwise—

(i) in not more than three months,

(ii) in more than three months but not more than one year,

(iii) in more than one year but not more than five years, and

(iv) in more than five years

(2) For the purpose of subparagraph (1), where an amount is repayable by instalments, each instalment is to be treated as a separate amount.

Non-retail funds and deposits

27

(1) The amounts shown in the balance sheet as “non-retail funds and deposits” shall be analysed for the total and for each sub division by lower case letters as follows—

(a) accrued interest,

(b) amounts which are repayable on demand or are for an indeterminate period, being repayable upon seven days notice, and

(c) amounts repayable from the balance sheet date in the ordinary course of business and whether by virtue of the giving of a period of notice or otherwise—

(i) in not more than three months,

(ii) in more than three months but not more than one year,

(iii) in more than one year but not more than five years, and

(iv) in more than five years.

(2) For the purpose of subparagraph (1), where an amount is repayable by instalments, each instalment is to be treated as a separate amount.

Other liabilities

28

(1) Any amount classifiable among “other liabilities” in the balance sheet and falling due after more than one year from the balance sheet date shall be separately disclosed.

(2) The amount for creditors in respect of taxation and social security shall be separately disclosed.

Reserves and provisions

29

(1) Where any amount is transferred—

(a) to or from any reserves (including the revaluation reserve),

(b) to any provisions for liabilities and charges, or

(c) from any provisions for liabilities and charges otherwise than for the purpose for which the provisions was established, and the reserves or provisions are shown or would but for Regulation 3(4) be shown as separate items in the society’s balance sheet, the information required by the following sub-paragraph shall be given in respect of the aggregate of reserves or provisions included in items in the balance sheet to which any such transfer relates.

(2) The information required by this subparagraph is—

(a) the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b) any amounts transferred to or from the reserves or provisions during that year, and

(3) Particulars shall be given of each provision included in the item “Provisions for liabilities and charges” in the balance sheet.

(4) The amount of the provision for deferred taxation shall be stated separately from the amount of any provision for other taxation.

Subordinated liabilities

30

(1) The following information shall be disclosed in relation to any borrowing included in the balance sheet as subordinated liabilities and which exceeds 10 per cent of the total for that item—

(a) its amount,

(b) the currency in which it is denominated,

(d) the circumstances in which early repayment may be demanded,

(e) the terms of the subordination, and

(f) the existence of any provisions whereby it may be converted into some other form of liability, and the terms of such provisions.

(2) There shall also be stated the general terms of any other borrowings included within subordinated liabilities.

Subscribed capital

31

(1) Where subscribed capital of more than one class has been allotted, the accounting par value of each class allotted shall be disclosed.

(2) The following information shall be disclosed in relation to any class of subscribed capital included in the balance sheet and which exceeds 10 per cent, of the total for that item—

(a) its amount,

(b) the currency in which it is denominated,

(d) the fact that it is borrowing for an indeterminate period, and

(e) the existence of any provisions whereby it may be converted into some other form of liability, and the terms of such provisions.

There shall also be stated the general terms of any other amounts included within subscribed capital.

(3) If the society has allotted any subscribed capital during the year, the following information shall be given—

(a) the reason for making the allotment,

(b) the classes of subscribed capital allotted, and

Fixed Cumulative interest

32

If any fixed cumulative interest on the society’s subscribed capital is in arrears there shall be stated:

(a) the amount of the arrears, and

(b) the period for which the interest or, if there is more than one class of subscribed capital, each class of interest is in arrears.

Details of assets charged

33

In relation to each Liabilities item and each Memorandum item in the balance sheet formats there shall be disclosed—

(a) the aggregate amount of any assets which have been charged to secure any liability or potential liability included thereunder,

(b) the aggregate amount of the liabilities or potential liabilities so secured, and

34

Particulars shall be given of any charge on the assets of the society to secure the liabilities of any other person, including, where practicable, the amount secured.

Guarantees and other financial commitments

35

(1) There shall be stated, where practicable—

(a) the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for in the balance sheet, and

(b) the aggregate amount or estimated amount of capital expenditure authorised by the directors which has not been contracted for.

(2) Particulars shall be given of—

(a) any pension commitments included under any provision shown in the balance sheet, and

(b) any such commitment for which no such provision has been made, and, where any such commitment relates wholly or partly to pensions payable to past directors of the society separate particulars shall be given of that commitment so far as it relates to such pensions.

(3) Particulars shall also be given of any other financial commitments, including contingent liabilities, which have not been provided for in the balance sheet, have not been included in the memorandum items in the balance sheet and are relevant to assessing the society’s state of affairs at the end of the financial year.

(4) Commitments within any of the preceding subparagraphs undertaken on behalf of or for the benefit of any associated body of the society shall be stated separately from the other commitments within that subparagraph.

(5) No disclosure need be made under subparagraphs (3) or (4) to the extent that an amount with respect to a contingent liability or to a commitment has been included in the Memorandum items in the balance sheet.

(6) There shall be disclosed the nature and amount of any contingent liabilities and commitments included in Memorandum items 20 and 21 in Part I and 22 and 23 in Part II of Schedule 2.

Memorandum items : Subsidiary undertakings

36

(1) With respect to contingent liabilities required to be included under Memorandum item 20 in Part I of Schedule 2, there shall be stated the amount of such contingent liabilities incurred on behalf of or for the benefit of any subsidiary undertakings.

(2) With respect to commitments required to be included under Memorandum item 21 in Part I of Schedule 2, there shall be stated the amount of such commitments undertaken on behalf of or for the benefit of any subsidiary undertakings.

Leasing transactions

37

The aggregate amount of all assets (other than land) leased to other persons, shall be disclosed, broken down so as to show the aggregate amount included in each relevant balance sheet item.

Assets and liabilities denominated in a currency other than sterling

38

(1) The aggregate amount, in sterling, of all assets denominated in a currency other than sterling, together with the aggregate amount, in sterling, of all liabilities so denominated, shall be disclosed.

(2) For the purposes of this paragraph, an appropriate rate of exchange prevailing at the date of the balance sheet shall be used. Sundry assets, sundry liabilities, prepayments and accrued income and accruals and deferred income

39

Where any amount to be included under any of the following items is material, particulars shall be given of each type of asset or liability included therein, including an explanation of the nature of the asset or liability and the amount included with respect to assets or liabilities of that type:

(a) In Part I of Schedule 2, items 4(f), 7, 8, 12(c), and 13, and

(b) In Part II of Schedule 2, items 4(f), 5(b), 8, 9, 13(c) and 14.

Unmatured forward transactions

40

There shall be disclosed with respect to forward transactions unmatured at the date of the balance sheet the categories of such transactions, by reference to an appropriate system of classification.

Other miscellaneous matters

41

(1) Subject to the following subparagraph, in respect of every item stated in a note to the annual accounts the corresponding amount for the financial year immediately preceding that to which the accounts relate shall also be stated and where it is not reasonable to compare the corresponding amount, it shall be adjusted and particulars of the adjustment and the reasons for it shall be given.

(2) Subparagraph (1) does not apply in relation to any amounts stated by virtue of any of the following provisions—

(a) paragraphs 20, 24(1) to (4)(b), 29(1) and (2) and 42 of this Schedule,

(b) paragraph 10 of Schedule 4, and

(3) Particulars shall be given of any case where the cost of any asset is for the first time determined under paragraph 25 of Schedule 7.

Directors' loans and transactions

42

(1) This paragraph applies, subject to subparagraph (5), in relation to—

(a) loans from and other transactions and arrangements with the society described in section 65 of the Act (which restricts loans to and other transactions and arrangements with directors and persons connected with them), other than those to which section 65(5) and (6) of the Act applies, and

(b) in the case of a group accounts society, loans from and other transactions and arrangements with a subsidiary undertaking of the society to which paragraph (a) would apply were the society rather than the subsidiary undertaking a party to them.

(2) The notes to the annual accounts shall contain a statement, in relation to such loans, transactions, and arrangements showing as follows—

(a) the aggregate amounts outstanding under them at the end of the financial year, and

(b) the numbers of persons for whom such loans, transactions and arrangements were made.

(3) The notes to the annual accounts shall, in relation to any loan or other transaction or arrangement subsisting during or at the end of the financial year, make the following disclosures:

(a) where a copy of it or a memorandum of its terms is included in the register maintained under section 68 of the Act (which requires the maintenance of such a register), the existence of the register and the availability of requisite particulars from it for inspection shall be disclosed;

(b) where it comes within subparagraph (1)(b), its particulars shall be disclosed unless it was one which would, had the subsidiary undertakings of the society formed part of the society, have been excepted from the obligations imposed by section 68 of the Act.

(4) Regulation 5(2)(b) shall not apply to this paragraph.

(5) This paragraph applies in relation to loans to, and other transactions and arrangements with, a person connected with a director of the society where the society (or in the case of a subsidiary undertaking incorporated in the United Kingdom, the subsidiary undertaking) has notice of the connection between that director and that person.

SCHEDULE 6 — NOTES TO ANNUAL ACCOUNTS: INFORMATION IN RESPECT OF ASSOCIATED BODIES

PART I — SOCIETIES NOT REQUIRED TO PREPARE CONSOLIDATED ACCOUNTS

Subsidiary undertakings

1

(1) The following information shall be given where at the end of the financial year the society has subsidiary undertakings but is not required to prepare consolidated accounts.

(2) The name of each subsidiary undertaking shall be stated.

(3) There shall be stated with respect to each subsidiary undertaking—

(a) if it is incorporated outside the United Kingdom, the country in which it is incorporated;

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland, or in Northern Ireland.

(4) The specific reason why under Regulation 4 each subsidiary undertaking is not required to be included in the consolidated accounts.

Holdings in subsidiary undertakings

2

(1) There shall be stated in relation to shares of each class held by the society in a subsidiary undertaking—

(a) the identity of the class, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

(2) The shares held by or on behalf of the society itself shall be distinguished from those attributed to the society which are held by or on behalf of a subsidiary undertaking.

Financial information about subsidiary undertakings

3

(1) There shall be disclosed with respect to each subsidiary undertaking—

(a) the aggregate amount of its capital and reserves as at the end of its relevant financial year, and

(b) its profit or loss for that year.

(2) That information need not be given if—

(a) the subsidiary undertaking is not required by any provision of the Companies Act 1985[^f00025] or the Companies (Northern Ireland) Order 1986[^f00026] to deliver a copy of its balance sheet for its relevant financial year and does not otherwise publish that balance sheet in the United Kingdom or elsewhere, and

(b) the society’s holding is less than 50 per cent of the nominal value of the shares in the undertaking.

(3) Information otherwise required by this paragraph need not be given if it is not material for the purpose of giving a true and fair view for the society of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

(4) For the purposes of this paragraph the “relevant financial year” of a subsidiary undertaking is—

(a) if its financial year ends with that of the society, that year, and

(b) if not, its financial year ending last before the end of the society’s financial year.

Financial years of subsidiary undertakings

4

(1) Where the financial year of one or more subsidiary undertakings did not end with that of the society, there shall be stated in relation to each such undertaking—

(a) the reasons why the society’s directors consider that its financial year should not end with that of the society, and

(b) the date on which its last financial year ended (last before the end of the society’s financial year).

(2) Instead of the dates required by subparagraph (1)(b) being given for each subsidiary undertaking, the earliest and latest of those dates may be given.

Further information about subsidiary undertakings

5

(1) There shall be disclosed—

(a) any qualifications contained in the auditors' reports on the accounts of subsidiary undertakings for financial years ending with or during the financial year of the society, and

(b) any note or saving contained in such accounts to call attention to a matter which, apart from the note or saving, would properly have been referred to in such a qualification, in so far as the matter which is the subject of the qualification or note is not covered by the society’s own accounts and is material from the point of view of its members.

(2) The aggregate amount of the total investment of the society in the shares of subsidiary undertakings shall be stated by way of the equity method of valuation, unless the directors state their opinion that the aggregate value of the assets of the society consisting of shares in, or amounts owing (whether on account of a loan or otherwise) from, the society’s subsidiary undertakings is not less than the aggregate of the amounts at which those assets are stated or included in the society’s balance sheet.

(3) In so far as information required by this paragraph is not obtainable, a statement to that effect shall be given instead.

Significant holdings in undertakings other than subsidiary undertakings

6

(1) The information required by paragraphs 7 and 8 shall be given where at the end of the financial year the society has a significant holding in an undertaking which is not a subsidiary undertaking of the society.

(2) A holding is significant for this purpose if—

(a) it amounts to 20 per cent. or more of the nominal value of the shares in the undertaking, or

(b) the amount of the holding (as stated or included in the society’s accounts) exceeds one- tenth of the amount (as so stated) of the society’s assets.

7

(1) The name of the undertaking shall be stated.

(2) There shall be stated—

(a) if the undertaking is incorporated outside the United Kingdom, the country in which it is incorporated,

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland, or in Northern Ireland,

(3) There shall also be stated—

(a) the identity of each class of shares in the undertaking held by the society, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

8

(1) Where the society has a significant holding in an undertaking amounting to 20 per cent. or more of the nominal value of the shares in the undertaking, there shall also be stated—

(a) the aggregate amount of the capital and reserves of the undertaking as at the end of its relevant financial year, and

(b) its profit or loss for that year.

(2) That information need not be given if the investment of the society in all undertakings in which it has such a holding as is mentioned in subparagraph (1) is shown, in aggregate, in the notes to the accounts by way of the equity method of valuation.

(3) That information need not be given in respect of an undertaking if—

(a) the undertaking is not required by any provision of the Companies Act 1985[^f00027] or the Companies (Northern Ireland) Order 1986[^f00028] to deliver a copy of its balance sheet for its relevant financial year and does not otherwise publish that balance sheet in the United Kingdom or elsewhere, and

(b) the society’s holding is less than 50 per cent. of the nominal value of the shares in the undertaking.

(4) Information otherwise required by this paragraph need not be given if it is not material for the purpose of giving a true and fair view for the society of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

(5) For the purposes of this paragraph the “relevant financial year” of an undertaking is—

(a) if its financial year ends with that of the society, that year, and

(b) if not, its financial year ending last before the end of the society’s financial year.

Construction of references to shares held by society

9

(1) References in this Part of this Schedule to shares held by a society shall be construed as follows.

(2) For the purposes of paragraphs 2 to 5—

(a) there shall be attributed to the society any shares held by a subsidiary undertaking, or by a person acting on behalf of the society or a subsidiary undertaking; but

(b) there shall be treated as not held by the society any shares held on behalf of a person other than the society or a subsidiary undertaking.

(3) For the purposes of paragraphs 6 to 8—

(a) there shall be attributed to the society shares held on its behalf by any person; but

(b) there shall be treated as not held by a society shares held on behalf of a person other than the society.

(4) For the purposes of paragraphs 2 to 8, shares held by way of security shall be treated as held by the person providing the security—

(a) where apart from the right to exercise them for the purposes of preserving the value of the security, or of realising it, the rights attached to the shares are exercisable only in accordance with his instructions, and

(b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights attached to the shares are exercisable only in his interests.

PART II — SOCIETIES REQUIRED TO PREPARE CONSOLIDATED ACCOUNTS

Subsidiary undertakings

10

(1) The following information shall be given with respect to the undertakings which are subsidiary undertakings of the society at the end of the financial year.

(2) The name of each undertaking shall be stated.

(3) There shall be stated—

(a) if the undertaking is incorporated outside the United Kingdom, the country in which it is incorporated;

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland or in Northern Ireland;

(4) It shall be stated whether the subsidiary undertaking is included in the consolidation and, if it is not, the reason for excluding it from consolidation shall be given.

(5) It shall be stated with respect to each subsidiary undertaking by virtue of which of the conditions specified in section 258(2) of the Companies Act 1985 it is a subsidiary undertaking of the parent society[^f00029]

(6) That information need not be given if the relevant condition is that specified in subsection (2)(a) of that section and the immediate parent society holds the same proportion of the shares in the undertaking as it holds voting rights.

Holdings in subsidiary undertakings

11

(1) The following information shall be given with respect to the shares of a subsidiary undertaking held—

(a) by the society, and

(b) by the group; and the information under paragraphs (a) and (b) shall (if different) be shown separately.

(2) There shall be stated—

(a) the identity of each class of shares held, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

Financial information about subsidiary undertakings not included in the consolidation

12

(1) There shall be shown with respect to each subsidiary undertaking not included in the consolidation—

(a) the aggregate amount of its capital and reserves as at the end of its relevant financial year, and

(b) its profit or loss for that year.

(2) That information need not be given if the group’s investment in the undertaking is included in the accounts by way of the equity method of valuation or if—

(a) the undertaking is not required by any provision of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 to deliver a copy of its balance sheet for its relevant financial year and does not otherwise publish that balance sheet in the United Kingdom or elsewhere, and

(b) the holding of the group is less than 50 per cent. of the nominal value of the shares in the undertaking.

(3) Information otherwise required by this paragraph need not be given if it is not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings as a whole, of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

(4) For the purpose of this paragraph the “relevant financial year” of a subsidiary undertaking is—

(a) if its financial year ends with that of the society, that year, and

(b) if not, its financial year ending last before the end of the society’s financial year.

Financial years of subsidiary undertakings

13

(1) Where the financial year of one or more subsidiary undertakings did not end with that of the society, there shall be stated in relation to each such undertaking—

(a) the reasons why the society’s directors consider that its financial year should not end with that of the society, and

(b) the date on which its last financial year ended (last before the end of the society’s financial year).

(2) Instead of the dates required by subparagraph (1)(b) being given for each subsidiary undertaking the earliest and latest of those dates may be given.

Further information about subsidiary undertakings excluded from consolidation

14

(1) The following information shall be given with respect to subsidiary undertakings excluded from consolidation.

(2) There shall be disclosed—

(a) any qualification contained in the auditor’s reports on the accounts of the subsidiary undertaking for financial years ending with or during the financial year of the society, and

(b) any note or saving contained in such accounts to call attention to a matter which, apart from the note or saving, would properly have been referred to in such a qualification, in so far as the matter which is the subject of the qualification or note is not covered by the consolidated accounts and is material from the point of view of the members of the society.

(3) In so far as information required by this paragraph is not obtainable, a statement to that effect shall be given instead.

Associated undertakings

15

(1) The following information shall be given where an undertaking included in the consolidation has an interest in an associated undertaking.

(2) The name of the associated undertaking shall be stated.

(3) There shall be stated—

(a) if the undertaking is incorporated outside the United Kingdom, the country in which it is incorporated;

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland or Northern Ireland;

(4) The following information shall be given with respect to the shares of the undertaking held—

(a) by the society, and

(b) by the group, and the information under paragraphs (a) and (b) shall be given separately.

(5) There shall be stated—

(a) the identity of each class of shares held, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

(6) In this paragraph “associated undertaking” has the meaning given by Regulation 2, and the information required by this paragraph shall be given notwithstanding that Regulation 4(12) applies in relation to the accounts themselves.

Other significant holdings of society or group

16

(1) The information required by paragraphs 17 and 18 shall be given where at the end of the financial year the society has a significant holding in an undertaking which is not one of its subsidiary undertakings and does not fall within paragraph 15 (associated undertakings).

(2) A holding is significant for this purpose if—

(a) it amounts to 20 per cent. or more of the nominal value of the shares in the undertaking, or

(b) the amount of the holding (as stated or included in the society’s individual accounts) exceeds one-tenth of the amount of its assets (as so stated).

17

(1) The name of the undertaking shall be stated.

(2) There shall be stated—

(a) if the undertaking is incorporated outside the United Kingdom, the country in which is incorporated;

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland or in Northern Ireland;

(3) The following information shall be given with respect to the shares of the undertaking held by the society.

(4) There shall be stated—

(a) the identity of each class of shares held, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

18

(1) Where the society has a significant holding in an undertaking amounting to 20 per cent or more of the nominal value of the shares in the undertaking there shall also be stated—

(a) the aggregate amount of the capital and reserves of the undertaking as at the end of its relevant financial year, and

(b) its profits or loss for that year.

(2) That information need not be given in respect of an undertaking if—

(a) the undertaking is not required by any provision of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 to deliver a copy of its balance sheet for its relevant financial year and does not otherwise publish that balance sheet in the United Kingdom or elsewhere, and

(b) the society’s holding is less than 50 per cent. of the nominal value of the shares in the undertaking,

(3) Information otherwise required by this paragraph need not be given if it is not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings as a whole, of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

(4) For the purposes of this paragraph the “relevant financial year” of an undertaking is—

(a) if its financial year ends on the same date as that of the society, that year, and

(b) if not, its financial year ending last before the end of the society’s financial year.

19

(1) The information required by paragraphs 20 and 21 shall be given where at the end of the financial year the group has a significant holding in an undertaking which is not a subsidiary undertaking of the society and does not fall within paragraph 15 (associated undertakings).

(2) A holding is significant for this purpose if—

(a) it amounts to 20 per cent. or more of the nominal value of the shares in the undertaking, or

(b) the amount of the holding (as stated or included in the group accounts) exceeds one-tenth of the amount of the group’s assets (as so stated).

20

(1) The name of the undertaking shall be stated.

(2) There shall be stated—

(a) if the undertaking is incorporated outside the United Kingdom, the country in which it is incorporated;

(b) if it is incorporated in the United Kingdom, whether it is registered in England and Wales, Scotland or in Northern Ireland;

(3) The following information shall be given with respect to the shares of the undertaking held by the group.

(4) There shall be stated—

(a) the identity of each class of shares held, and

(b) the proportion of the nominal value of the shares of that class represented by those shares.

21

(1) Where the holding of the group amounts to 20 per cent. or more of the nominal value of the shares in the undertaking, there shall also be stated—

(a) the aggregate amount of the capital and reserves of the undertaking as at the end of its relevant financial year, and

(b) its profit or loss for that year.

(2) That information need not be given if—

(a) the undertaking is not required by any provision of the Companies Act 1985 or the Companies (Northern Ireland) Order 1986 to deliver a copy of its balance sheet for its relevant financial year and does not otherwise publish that balance sheet in the United Kingdom or elsewhere, and

(b) the holding of the group is less than 50 per cent. of the nominal value of the shares in the undertaking.

(3) Information otherwise required by this paragraph need not be given if it is not material for the purpose of giving a true and fair view for the society and its subsidiary undertakings as a whole, of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

(4) For the purpose of this paragraph the “relevant financial year” of an undertaking is—

(a) if its financial year ends with that of the society, that year, and

(b) if not, its financial year ending last before the end of the society’s financial year.

Construction of references to shares held by society or group

22

(1) References in this Part of this Schedule to shares held by the society or the group shall be construed as follows.

(2) For the purposes of paragraphs 11, 15(4) and (5) and 16 to 18—

(a) there shall be attributed to the society shares held on its behalf by any person; but

(b) there shall be treated as not held by the society shares held on behalf of a person other than the society.

(3) References to shares held by the group are to any shares held by or on behalf of the society or any of its subsidiary undertakings; but there shall be treated as not held by the group any shares held on behalf of a person other than the society or any of its subsidiary undertakings.

(4) Shares held by way of security shall be treated as held by the person providing the security—

(a) where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights attached to the shares are exercisable only in accordance with his instructions, and

(b) where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of security, or of realising it, the rights attached to the shares are exercisable only in his interests.

PART III — SUPPLEMENTARY PROVISIONS

23

he information required by paragraphs 7, 17 and 20 of this Schedule need not be given if it is not material for the purpose of giving a true and fair view for the society or for the society and its subsidiary undertakings, as a whole, as appropriate, of the matters set out in subsections (2), (3) and (4) of section 73 of the Act.

24

For the purposes of paragraphs 5 and 14 of this Schedule, “qualifications” in relation to the auditors' report on the accounts of a subsidiary undertaking, means any qualifications which in the auditors' opinion indicate that the accounts concerned have not been properly prepared in accordance with the Companies Acts; or in the case of an undertaking the accounts of which are not required to be prepared in accordance with the Companies Acts, indicate that those accounts have not been prepared in accordance with any corresponding legislation under which such accounts need to be prepared.

SCHEDULE 7 — ACCOUNTING PRINCIPLES AND RULES

PART I — ACCOUNTING PRINCIPLES

1

Subject to paragraph 7, the amounts to be included in respect of all items shown in a society’s annual accounts shall be determined in accordance with the principles set out in this Part of this Schedule.

2

The society shall be presumed to be carrying on business as a going concern, and so, where group accounts are prepared, shall the society and its subsidiary undertakings.

3

Accounting policies shall be applied consistently within the same accounts and from one financial year to the next.

4

(1) The amount of any item shall be determined on a prudent basis, and in particular—

(a) only profits realised at the date of the balance sheet shall be included in the income and expenditure account; and

(b) all liabilities and losses which have arisen or are likely to arise in respect of the financial year to which the accounts relate or a previous financial year shall be taken into account, including those which only become apparent between the balance sheet date and the relevant date.

(2) For the purposes of paragraph (1), the relevant date is the date of signature of the balance sheet of the society on behalf of the board of directors under section 80 of the Act (signing of balance sheet and of documents).

5

Except so far as these Regulations otherwise specify, income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment.

6

In determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

PART II — DEPARTURE FROM ACCOUNTING PRINCIPLES

7

If it appears to the directors of a society that there are special reasons for departing from any of the principles stated in Part I in preparing annual accounts in respect of any financial year, they may do so, but particulars of the departure, the reasons for it, and its effect shall be given in a note to the annual accounts.

PART III — FIXED ASSETS

General rules

8

(1) Subject to any provision for depreciation or diminution in value made in accordance with paragraph 9 or 10, the amount to be included in respect of any fixed asset shall be its cost unless it is valued in accordance with paragraph 28. (2)

(a) Assets included in items 5 and 6 in Part I and in items 6 and 7 in Part II of Schedule 2 shall be valued as fixed assets.

(b) Other assets falling to be included in the balance sheet shall be valued as fixed assets where they are intended for use on a continuing basis in the normal course of the activities of the society or of the society and its subsidiary undertakings.

9

In the case of any fixed asset which has a limited useful economic life, the amount of—

(a) the cost, or

(b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its cost less that estimated residual value, shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.

10

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.