Every building society is required (by section 71 of the 1986 Act) to keep accounting records which:
explain its transactions;
disclose, with reasonable accuracy and promptness, the state of its business at any time; and
enable the directors and the society to properly discharge their respective duties under the 1986 Act and article 4 of the IAS Regulations (if applicable).
The accounting records should contain:
day to day entries of all sums received and paid by the society;
day to day entries of every transaction which will, or may reasonably be expected to, give rise to assets or liabilities of the society; and
a record of the societys assets and liabilities and, in particular, the assets and liabilities of any class specifically regulated under section 6 (the lending limit) and section 7 (the funding limit) of the 1986 Act.
The Accounts Regulations set out specific legal and regulatory requirements about the form and content of the financial statements which a building society and its directors must produce. A building society should ensure that the documents it presents to its members are understandable and balanced so that they report the societys setbacks as well as its successes.
The Accounts Regulations and the 1986 Act require a building society to disclose to its members, by its annual report and accounts:
the interests of the societys directors;
the interests of its chief executive (on the matter of service contracts) and other officers (on the matter of options to subscribe for shares or debentures);
individual directors remuneration;
particulars of service contracts for the directors and chief executive;
current and past directors additional retirement benefits; and
directors interests in the shares or debentures of a connected undertaking.
In the interests of transparency, a building society should also explain whether it adheres to some or all of the Combined Code and, if so, in what respects.