Co-operatives could save up to £10,000 a year thanks to new government proposals requiring fewer of them to appoint an auditor.
The government has launched a consultation on proposals to increase the thresholds at which co-operatives and community benefit societies have to produce a full audit report.
At the moment, co-ops with a turnover of less than £5.6m and assets of less than £2.8m can choose not to appoint an auditor. The government is proposing to increase the turnover and asset thresholds to £10.2m and £5.1m respectively.
This will mean that over 70% of co-ops in the UK will no longer have to undertake a full audit, levelling the playing field between co-ops and companies of the same size.
Once the legislation passes, it is expected the change will come into effect in the first half of next year.
Ed Mayo, secretary general of sector body Co-operatives UK, which has spent a year lobbying for the change, said: “We are pleased government has heeded calls to remove this unnecessary extra burden on co-operative and community businesses.
“This is a great example of the practical steps government can take to support the UK’s co-operative sector, which plays a key role in fostering a more inclusive economy.”
There are 7,000 co-operatives in the UK, working in all parts of the economy. Together they contribute more than £34.1bn to the British economy, with over 17.5 million people owning the UK’s co-operatives.
Economic secretary to the Treasury, Stephen Barclay, said: “We want to see co-operatives and community benefit societies across the UK thrive and grow. That’s why we’re reducing onerous administrative burdens on these societies, saving them money and freeing them up to concentrate on what matters the most – the needs of their members and communities.”
In order to take advantage of this change, co-ops must pass a resolution to dis-apply the requirement to produce a full audit report through their members, and the society must not be on the list of exempted societies, such as credit unions. Co-ops can still conduct a full audit if they wish.
The draft legislation is open to consultation until 22 September, and Co-operatives UK has developed a template response which co-ops and community benefit societies can use to submit their views.
Co-operatives UK says it is still lobbying for changes to the auditors’ report’ requirement for societies with a turnover over £90,000,.
It added: “While HM Treasury officials agreed that changes were required, they took the view that this required primary legislation, which is simply not an option in their department at present. We will keep at this though, because it’s a burden that needs to be dealt with.”