The Building Societies (Accounts and Related Provisions) Regulations 1987

• Citation: S.I. 1987/2072
• Sections: 227

Section 1 Citation and commencement

These Regulations may be cited as the Building Societies (Accounts and Related Provisions) Regulations 1987 and shall come into force on 31st December 1987.

Section 2 Interpretation

(1) In these Regulations—

“ the Act ” means the Building Societies Act 1986;

“group accounts society” means a society the directors of which are obliged by section 72 of the Act (duty of directors to prepare annual accounts) to prepare group accounts;

“particular account” means an income and expenditure account, a balance sheet, or a statement of the source and application of funds;

“relevant subsidiary” means a subsidiary of a group accounts society with which the group accounts of the society are required by section 72 of the Act to deal;

“single accounts society” means a society which is not a group accounts society; and

“society” means a building society.

(2) Nothing in these Regulations shall be taken to imply that the carrying on by a society of any activity provision for the recording of which is contained in these Regulations is, by virtue of that provision, within the powers of that society.

Section 3 Annual accounts

(1) In respect of the annual accounts of any single accounts society—

(a) every income and expenditure account shall be prepared in the format set out in Part I of Schedule 1 below,

(b) every balance sheet shall be prepared in the format set out in Part I of Schedule 2 below, and

(c) every statement of the source and application of funds shall be prepared in the format set out in Part I of Schedule 3 below,

and in accordance with the relevant provisions, and every such document shall, subject to the following paragraphs of this Regulation, be prepared in the order and under the headings and sub-headings in the format applicable to it.

(2) In respect of the annual accounts of any group accounts society—

(a) the provisions of this Regulation shall apply subject to the provisions of Regulation 4 below, the supplementary provisions of which shall also have effect in relation to those accounts, and

(b) within those accounts—

(i) every income and expenditure account relating to the society shall be prepared in the format set out in Part I of Schedule 1 below,

(ii) every income and expenditure account relating to the society and its relevant subsidiaries shall be prepared in the format set out in Part II of Schedule 1 below,

(iii) every balance sheet relating to the society shall be prepared in the format set out in Part I of Schedule 2 below,

(iv) every balance sheet relating to the society and its relevant subsidiaries shall be prepared in the format set out in Part II of Schedule 2 below, and

(v) every statement of the source and application of funds of the society and its relevant subsidiaries shall be prepared in the format set out in Part II of Schedule 3 below, and if such a statement is also prepared in relation to the society alone, that further statement shall be prepared in the format set out in Part I thereof,

and in accordance with the relevant provisions, and every such document shall, subject to the following paragraphs of this Regulation, be prepared in the order and under the headings and sub-headings in the format applicable to it.

(3) Paragraphs (1) and (2) above are not to be read as—

(a) requiring the heading or sub-heading for any item to be distinguished by any letter or number assigned to that item in the format in which it appears, or

(b) prohibiting the showing of any item in a particular account in greater detail than is required by the format for that particular account.

(4) Items preceded by lower case letter or Roman numeral in any format set out in Schedule 1, 2 or 3 may be combined in a society’s annual accounts for any financial year if either:—

(a) their individual amounts are not material to assessing—

(i) in respect of an income and expenditure account, the income and expenditure of the society (or, as the case may be, the society and its relevant subsidiaries) for that year, and

(ii) in respect of a balance sheet, the state of affairs of the society (or, as the case may be, the society and its relevant subsidaries) as at the end of that year, and

(iii) in respect of a statement of the source and application of funds, the manner in which the business of the society (or, as the case may be, the society and its relevant subsidiaries) has been financed and in which its (or their) financial resources have been used during that year, or

(b) their combination facilitates that assessment,

but where subparagraph (b) above applies, the individual amounts of any items so combined shall be disclosed in a note to the annual accounts.

(5) Subject to paragraph (7) below, a heading or sub-heading for an item contained in any format set out in Schedule 1, 2 or 3 shall not be included if there is no amount to be shown for that item in respect of the financial year to which the annual accounts relate (and a total need not be included if, as a result of this paragraph, it would be composed of a single item).

(6) The annual accounts may deal with an investment of the society or any relevant subsidiary in the shares of any body corporate which is not a relevant subsidiary by way of the equity method of accounting in any case where that body corporate is so closely associated with the society or that relevant subsidiary as to justify the use of that method in dealing with that investment in the shares of that body corporate.

(7) For the purpose of comparing particular accounts with those for the preceding financial year—

(a) in respect of every item shown in a balance sheet, income and expenditure account and statement of the source and application of funds, the corresponding amount for the preceding financial year shall be shown,

(b) where that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the annual accounts relate the former amount shall be adjusted and particulars of the adjustment and the reasons for it shall be disclosed in a note to the annual accounts, and

(c) paragraph (5) above does not apply in any case where an amount can be shown for the item to which the heading or sub-heading relates in respect of the preceding financial year, and in such a case that amount shall be shown under the heading or sub-heading required for that item.

(8) In this Regulation, “the relevant provisions” means, in relation to any particular account, Part III of the Schedule below Parts I and II of which contain formats of that particular account.

Section 4 Group accounts—supplementary provisions

(1) If the financial year of any relevant subsidiary does not coincide with that of the society, the components of the annual accounts relating to the society and its relevant subsidiaries shall, so far as they relate to that subsidiary, relate to its financial year ending last before the end of the financial year of the society dealt with in the annual accounts unless—

(a) the directors of the society are of the opinion that there are good reasons against it, and

(b) they disclose those reasons in the notes to the annual accounts.

(2) Each particular account which is a group account shall combine the information contained in the particular account of the society and the accounts of its relevant subsidiaries from which it is derived, adjusted so far as is necessary to consolidate those accounts.

(3) Where a society has subsidiaries whose financial years do not end with that of the society, the following information shall be given in relation to each such subsidiary by way of a note to the annual accounts, that is to say—

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

(b) the dates on which the subsidiaries' financial years ending last before that of the society respectively ended or the earliest and latest of those dates.

Section 5 Notes to annual accounts

(1) The annual accounts of any single accounts society shall, subject to paragraph (5) below, include notes to them containing the material specified, set out in the manner specified, in Schedule 4 below, as well as the notes required to be included by other provisions of these Regulations.

(2) The annual accounts of any group accounts society shall, subject to paragraph (5) below and any provision in Schedule 4 below which indicates otherwise, include notes to them containing—

(a) in respect of the society, and

(b) in respect of the society and its relevant subsidiaries in combination,

the material specified, set out in the manner specified, in Schedule 4 below, as well as the notes required to be included by other provisions of these Regulations.

(3) For the purposes of paragraph (2)(b) above—

(a) any reference in a relevant provision of Schedule 4 below to a society shall be taken as a reference to the society and its relevant subsidiaries in combination, and

(b) each associated body of the society which is not a relevant subsidiary shall be treated as an associated body of theirs.

(4) In paragraph (3) above “relevant provision” means, in relation to Schedule 4 below, a provision thereof other than paragraphs 4 and 21.

(5) Paragraphs (1) and (2) above are not to be read as prohibiting the disclosing of any material in the notes to the annual accounts in greater detail than is required by these Regulations.

Section 6 Accounting principles and rules

Each society shall prepare its annual accounts in accordance with the accounting principles and rules set out in Schedule 5 below.

Section 7 Directors' report

Each directors' report of a society prepared under section 75 of the Act (directors' report) shall contain, in addition to the other matters required to be contained in it by the Act, the material specified, set out in the manner specified, in Schedule 6 below.

Section 8 Annual business statement

(1) Each annual business statement of a society prepared under section 74 of the Act (duty of directors to prepare annual business statement) shall, subject to paragraphs (2) and (3) below, contain the material specified in Schedule 7 below.

(2) Nothing in this Regulation—

(a) requires the setting out of the material specified in Schedule 7 below in any particular manner, or

(b) prohibits the inclusion, for the purpose of the giving in the annual business statement of a true representation of the matters to which that material relates, of material additional to that required to be included by this Regulation.

(3) Any material required or permitted by this Regulation to be contained in the annual business statement may be included instead in the notes to the annual accounts or the directors' report and, where any such material is so included, the annual business statement shall specify where in those notes or (as the case may be) that report that material is to be found.

(4) The material required to be contained in the annual business statement by virtue of paragraph 3 of Schedule 7 below shall not be the subject of report by auditors under section 78 of the Act (auditors' report).

Section 9 Summary financial statement

(1) Subject to paragraph (2) of this Regulation, each summary financial statement of a society prepared under section 76 of the Act (summary financial statement for members and depositors) shall be prepared in the order and under the headings and sub-headings shown in the formats (and as directed by the notes) set out in Part I, and in accordance with the provisions of Part II, of Schedule 8 below, so as to contain—

(a) a statement in the prescribed form for the purposes of section 76(4) of the Act,

(b) a summary directors' report,

(c) a summary statement, and

(d) a summary of key financial ratios,

followed by the statement of the auditors' opinion required to be included by section 76(5) of the Act, and so as to give a summary account of the relevant matters.

(2) Paragraph (1) above is not to be read as—

(a) requiring the heading or sub-heading for any item to be distinguished by any letter or number assigned to that item in the format in which it appears,

(b) requiring the headings in Section B of Part I of Schedule 8 below to contain any particular wording,

(c) prohibiting the inclusion, in place of the words “THIS YEAR” and “LAST YEAR” in Sections C and D of Part I of Schedule 8 below, of other column headings consistent with paragraph 2 of Part II of that Schedule, or

(d) prohibiting the inclusion, for the purpose of assisting the giving in the summary financial statement of a summary account of the relevant matters, of material additional to that required to be included by this Regulation.

(3) In this Regulation “the relevant matters” are, in relation to a financial year of a society with which a summary financial statement deals, the financial development (during the year) and the financial position (at the end of the year) of—

(a) where section 76(2) of the Act does not apply, the society, and

(b) where section 76(2) of the Act applies, the society and its relevant subsidiaries.

Section 10 Interpretation of Schedules

Schedule 9 below shall have effect for the interpretation of the Schedules to these Regulations.

Section 11 Transitional provisions

Where any provision of these Regulations requires—

(a) the recording of a particular item for the entirety of a financial year, and—

(i) that financial year began before the coming into force of these Regulations, and

(ii) the legislation in force during the period beginning with the start of the financial year and ending immediately before the coming into force of these Regulations did not require the recording of, or the making of a return of, that particular item, or

(b) the recording of a particular item as at the end of a previous financial year, and—

(i) that previous financial year ended before the coming into force of these Regulations, and

(ii) the legislation in force as at the end of that previous financial year did not require the recording of, or the making of a return of, that particular item,

then if the records of the society are so kept as to enable that particular item to be identified, it shall be identified and so recorded, but if the records of the society are not so kept, it shall instead be included on the basis of an estimate.

Section 1

Interest receivable:

(a)

(i) On secured advances

(ii) On other lending

(b)

(i) On fixed-interest liquid assets

(ii) On other liquid assets.

Section 1

Interest receivable:

(a)

(i) On secured advances

(ii) On other lending

(b)

(i) On fixed-interest liquid assets

(ii) On other liquid assets

(c) Other

Section 1

Item 1(a) and (b) in each of Parts I and II above shall include—

(a) all income from assets entered under Asset items 2, 3, and 4(a), (b) and (c) in the balance sheet in the corresponding Part of Schedule 2 below, however calculated,

(b) interest receivable on—

(i) in the case of Part I above, advances and loans to associated bodies, and

(ii) in the case of Part II above, advances and loans to associated bodies other than relevant subsidiaries, and

(c) (in item 1(b) in each case) interest, other income and profits net of losses arising from liquid assets,

and the notes to the annual accounts shall disclose the amount of profits net of losses arising from liquid assets and the amount of interest and other income arising from them as separate amounts unless those two amounts are separately stated under each of item 1(b)(i) and 1(b)(ii) in each case.

Section 2

Interest payable:

(a) On retail funds and deposits

(b) On non-retail funds and deposits

Section 2

Interest payable:

(a) On retail funds and deposits

(b) On non-retail funds and deposits

Section 2

Item 1(a)(i) in Parts I and II above shall include all income to which paragraph 1 above refers arising from secured loans which are not advances secured on land as well as from advances secured on land.

Section 3

Net interest receivable

Section 3

Net interest receivable

Section 3

Items 4(a) and 11(b) in Parts I and II above shall only be included where the equity method of accounting is used.

Section 4

Income from associated bodies:

(a) Share of profits of associated companies

(b) Other

Section 4

Income from associated bodies:

(a) Share of profits of associated companies

(b) Other

Section 4

(1) Item 5(a) in Parts I and II above shall include income in respect of all services supplied for the account of third parties, and item 5(b) in those Parts shall include charges for the use of services of third parties.

(2) Any amount, apart from an appointed agency payment, which represents—

(a) commissions for guarantees and loan administration,

(b) commissions and other charges and income in respect of payment transactions, account administration charges and commissions for the safe custody and administration of deeds, securities or other related documents,

(c) commissions for foreign currency transactions,

(d) commissions and other charges and income in connection with insurance and pension contracts, or

(e) commissions and other charges and income in connection with arranging brokerage services,

and which falls within subparagraph (1) above but would also be capable of being included within an item other than those referred to in that subparagraph shall be included within the items so referred to.

(3) For the purposes of subparagraph (2) above, an appointed agency payment is a payment for a relevant agency function to a person who, by virtue of an appointment by a society, acts as its agent in that function, and a relevant agency function comprises action as an agent of the society for the purpose of receipt of sums in respect of shares or deposits or the making of advances secured on land.

Section 5

Other income and charges:

(a) Commissions receivable

(b) Commissions payable

(c) Other financial income

(d) Other financial charges

(e) Other operating income

Section 5

Other income and charges:

(a) Commissions receivable

(b) Commissions payable

(c) Other financial income

(d) Other financial charges

(e) Other operating income

Section 5

(1) Item 5(c) in Parts I and II above shall include the net profits, and item 5(d) the net losses, on financial instruments, and item 5(e) of those Parts shall, where it relates to development properties, include the profits net of losses on them.

(2) In subparagraph (1) above “financial instrument” means—

(a) in relation to Parts I and II above, an instrument the powers of the society in relation to which are derived from section 23 of the Act (power to hedge) and any option to purchase or sell any liquid asset, and

(b) additionally in relation to Part II above, an instrument on which interest or a dividend is capable of being received and which is not an advance, a loan or a liquid asset.

Section 6

Amortisation of intangible fixed assets

Section 6

Amortisation of intangible fixed assets

Section 7

Management expenses:

(a) Staff costs, showing separately—

(i) Wages and salaries

(ii) Social security costs

(iii) Other pension costs

(b) Depreciation and other amounts written off tangible fixed assets

(c) Other expenses

Section 7

Management expenses:

(a) Staff costs, showing separately—

(i) Wages and salaries

(ii) Social security costs

(iii) Other pension costs

(b) Depreciation and other amounts written off tangible fixed assets

(c) Other expenses

Section 8

Provisions for loans, advances and guarantees

Section 8

Provisions for loans, advances and guarantees

Section 9

Provisions for interests and shares in associated bodies

Section 9

Provisions for interests and shares in associated bodies

Section 10

Profit or loss on ordinary activities before tax

Section 10

Profit or loss on ordinary activities before tax

Section 11

Tax on profit or loss on ordinary activities:

(a) Society

(b) Associated companies

Section 11

Tax on profit or loss on ordinary activities:

(a) Society and relevant subsidiaries

(b) Associated companies

Section 12

Profit or loss on ordinary activities after tax

Section 12

Profit or loss on ordinary activities after tax

Section 13

Extraordinary income

Section 13

Minority interests

Section 14

Extraordinary charges

Section 14

Profit or loss before extraordinary items

Section 15

Extraordinary profit or loss

Section 15

Extraordinary income

Section 16

Tax on extraordinary profit or loss

Section 16

Extraordinary charges

Section 17

Extraordinary profit or loss after tax

Section 17

Extraordinary profit or loss