The Incorporated Societies Act 2022 passed into law in April this year, updating the previous Act that was passed 114 years ago in 1908.
As you can imagine, there are significant changes that Societies now need to understand. I’ve taken a close look and summarise some of the key changes.
Re-registration
All Incorporated Societies will be required to re-register under the new Act. Any society that does not re-register by 5 April 2026 will cease to exist. Registrations under the new Act are expected to open in October 2023.
Re-registration will require a revision to a Society’s constitution to include the information set out in Section 26 of the Act. These requirements can be
viewed here.
Financial Reporting requirements
Incorporated Societies registered under the new Act will now be required to prepare financial statements in accordance with the XRB accounting standards, unless the Society is considered ‘small’ under section 103.
Most societies will be required to report under the public benefit entity (PBE) accounting framework, aligning with the requirements of other charities.
These requirements will become mandatory once your society re-registers under the 2022 Act. Until this point, it can continue operating under the previous 1908 Act requirements.
Practically, the new financial reporting requirements will result in a uniform structure and expanded disclosures presented in the financial statements. This may include a cash flow statement as well as reporting on service performance.
Audit requirements
Under the new revised 2022 Act, societies exceeding a certain level of annual spending will have to have their financial statements audited. The threshold will be set by regulations, which are still to be determined – this is likely to be released in 2023.
Larger societies that are also registered charities will already have their financial statements audited. This will not change because of the 2022 Act.
Annual returns
Under the prior Act there was no requirement for Incorporated Societies to file an annual return. This changes with the new Act – returns must be filed annually as outlined in Section 109. There is, however, an exemption for charitable entities, who will not need to file with the Incorporated Societies Registrar, but instead simply continue to file their usual annual returns with Charities Services.
Other changes of note
The Act clearly articulates Officer’s duties that are based broadly on the Director’s duties from the Companies Act 1993. The concept of an Officer is deemed to be all committee members, as well as others, such as the CEO and treasurer.
The committee will be deemed the ‘governing body’ of the society, and will be required to have at least three members, and the majority must be members of the society (unless regulations prescribe otherwise).
Contact your local Moore Markhams office for any questions or if you need any advice about the changes.
Prepared by Andrew Steel, who joined Moore Markhams Wellington in 2019 as an audit partner.
As a registered Qualified Auditor and OAG (Office of the Auditor-General) Approved Auditor, Andrew works with organisations in a wealth of industries and providing valuable support, benchmarking and expertise from an independent viewpoint.