Building Societies (Hansard, 10 February 1982)

§ Mr. Bruce-Gardyne

I shall not comment on the particular case mentioned by the hon. Member, as the Institute of Chartered Accountants is still conducting a disciplinary inquiry into the conduct of certain of its members concerned with that case.

However, the answer to the hon. Member's question is "Yes". Generally, the problem in a number of societies in recent years appears to have been not that section 76 is deficient in this respect, but that the directors and officers of those societies have not fully realised the obligations imposed on them by that section to ensure that their society had an effective system of financial control. Since the failure of the Wakefield building society in 1976, and more particularly since the failure of the Grays building society, the Registry of Friendly Societies has made intensive efforts to bring home to directors their responsibilities under this section. This has been done with the full support of the Building Societies Association, the Building Societies Institute and the professional accounting bodies.

In particular: 389W

(i) the Registry has sent inspection teams to all the smaller societies to check on their systems of control and has nearly completed a programme of meetings with the boards of all societies, in which this point has been stressed;
(ii) the then Chief Registrar sent to the chairmen of all building societies in January and August 1981 letters drawing on the experience of those inspections and specifying the points which should be covered in establishing and documenting the systems of control—appendices 1 and 2 to his annual report for 198;
(iii) the annual returns from the societies now have to state the dates on which the board reviewed the way in which the society complied with section 76.

In addition, the Registry has co-operated with the Auditing Practices Committee in the preparation of the auditing guideline for building societies issued by that committee in January 1982. This specifically draws attention to the importance of section 76 and the duty of auditors to see that the requirements of that section have been met.

Year	Total Budget	Commission (staff pay)	Commission (other)	European Parliament	Council of Ministers	Court of Justice	Court of Aduitors†
	Mua^*/ Mecu	£m	Mua^*/ Mecu	£m	Mua^*/ Mecu	£m	Mua^*/ Mecu	£m	Mua^*/ Mecu	£m	Mua^*/ Mecu	£m	Mua^*/Mecu	£m
1971	3908.8	1628.7	71.5	29.8	33.2	17.4	11.6	4.8	17.4	7.2	2.6	1.1	0.8	0.3
1972	4327.6	1803.2	87.7	36.5	37.9	19.8	15.5	6.5	24.5	10.2	4.0	1.7	0.8	0.3
1973	5134.5	2139.4	102.4	42.7	63.5	33.2	25.2	10.5	33.3	13.9	7.0	2.9	0.8	0.3
1974	5225.0	2170.1	139.1	58.0	75.8	31.6	32.8	13.7	40.3	16.8	7.9	3.3	0.9	0.4
1975	6268.3	2611.8	163.4	68.1	89.0	37.1	41.1	17.1	49.9	20.8	9.3	3.9	1.1	0.5
1976	8470.6	2279.4	203.2	84.7	125.1	52.1	51.5	21.5	63.8	26.6	11.2	4.7	1.2	0.5
1977	9584.3	3993.5	258.0	107.5	147.4	61.4	67.5	28.1	71.8	29.9	12.7	5.3	1.9	0.8
1978	12,362.7	8,207.7	354.0	235.0	189.9	126.1	100.4	66.7	97.1	64.5	17.3	11.5	10.0	6.6
1979	14,447.0	9,338.4	379.7	245.4	201.5	130.2	144.2	93.2	102.8	66.4	19.6	12.7	12.7	8.2
1980	16,182.5	10,460.2	393.0	254.0	217.9	140.8	177.4	114.7	108.6	70.2	21.7	13.0	13.0	8.4
1981	18,434.0	10,185.4	422.6	233.5	242.6	134.0	199.4	110.2	113.1	62.5	25.4	14	14.8	8.2

^*The European unit of account introduced in 1978, and replaced the unit of account. The European currency unit was introduced in 1981 and replaced eua. The exchange rates used are, for 1971 to 1977, £1=2.4 eva, for 1978 £1=1.5062 eua, 1980 £1=1.6709 eua, for 1981 £1=1.810145 ecu.

† The court of auditors was formally established in 1978. Provision for the audit board which preceeded it was included in the European parliament's and Council's budgets.