Co-operative society is a business organisation with a special mode of doing business, by pulling together all the means of production co-operatively, elimination of middlemen and exploitation from outside forces.
Audit of Co-Operative Societies ( Sec 17):
The Registrar shall audit or authorise some other person to Audit.
The audit shall include an examination of overdue debts and a valuation of the assets and liabilities of the society.
The Auditor shall shall at all times have access to all the books, accounts, papers and securities of a society.
Imp Points relating to the Audit:
1. A CA is qualified as an Auditor. But, few State Co-operative societies have permitted only persons holding a government diploma, or who has served as an auditor in the co-operative department of a government to act as an auditor.
2. An auditor of a co-operative society is appointed by the Registrar of Co-operative Societies.
3. No member of a society other than a registered society can hold share capital of the society exceeding 20% or Rs.1,000 as Share Value.
4. A Society shall not make a loan to any person other than a Member. However, with the special sanction of the Registrar, a registered society may make a loan to another registered society.
5. A Society can accept loans and deposits from persons who are not members.
6. A society may invest its funds in
Central or State Co-operative Bank
Securities specified in section 20 of the Indian Trusts Act 1882
In the shares, securities, bonds or debentures of any other society with limited liability
In any co-operative bank, other than a Central or State co-operative bank, as approved by the Registrar on specified terms and conditions.
7. A prescribed percentage of the profits should be transferred to Reserve Fund, before distribution as dividends or bonus to members.
8. A Society may, with the sanction of the Registrar, contribute an amount not exceeding 10% of the net profits to Charities.
Special Features of Co-Operative Audit
Examination of overdue debts
Overdue Interest
Certification of Bad Debts
Valuation of Assets and Liabilities
Adherence to Co-operative Principles
Observations of the Provisions of the Act and Rules
Verification of Members Register and examination of their pass books
Reporting irregularities to the Registrar
Auditors of Multi-State Co-operative Society:
The following persons are not eligible for appointed as auditors of a Multi-State cooperative society:
A body corporate.
An officer or employee
a member
A person who is indebted to the Multi-State co-operative society
# First auditor or auditors of a Multi-State co-operative society shall be appointed by the board within one month of the date of registration.
#The subsequent auditor or auditors are appointed by Multi-State co-operative society, at each annual general meeting.
Power of Central Government to Direct Special Audit
CG can order for a Special Audit, Where the Central Government is of the opinion that:
Affairs Not Managed in Accordance With Prudent Commercial Practices
Managed as it would Cause Injury to Interest of Trade or Industry or Business
Financial Position is such as would endanger its Insolvency.
#CG shall order for special audit only if that Government or the State Government either by itself or both hold fifty-one percent or more of the paid-up share capital in such Multi-State co-operative society.
Inquiry & Inspection by Central Registrar
The Central Registrar may hold an inquiry or Inspection, on a request from
a federal co-operative to which a Multi-State Co-operative society is affiliated or
a creditor or not less than one-third of the members of the board or
not less than one-fifth of the total number of members of a Multi-state co-operative society.
Audit of Co-Operative Societies ( Sec 17):
The Registrar shall audit or authorise some other person to Audit.
The audit shall include an examination of overdue debts and a valuation of the assets and liabilities of the society.
The Auditor shall shall at all times have access to all the books, accounts, papers and securities of a society.
Imp Points relating to the Audit:
1. A CA is qualified as an Auditor. But, few State Co-operative societies have permitted only persons holding a government diploma, or who has served as an auditor in the co-operative department of a government to act as an auditor.
2. An auditor of a co-operative society is appointed by the Registrar of Co-operative Societies.
3. No member of a society other than a registered society can hold share capital of the society exceeding 20% or Rs.1,000 as Share Value.
4. A Society shall not make a loan to any person other than a Member. However, with the special sanction of the Registrar, a registered society may make a loan to another registered society.
5. A Society can accept loans and deposits from persons who are not members.
6. A society may invest its funds in
Central or State Co-operative Bank
Securities specified in section 20 of the Indian Trusts Act 1882
In the shares, securities, bonds or debentures of any other society with limited liability
In any co-operative bank, other than a Central or State co-operative bank, as approved by the Registrar on specified terms and conditions.
7. A prescribed percentage of the profits should be transferred to Reserve Fund, before distribution as dividends or bonus to members.
8. A Society may, with the sanction of the Registrar, contribute an amount not exceeding 10% of the net profits to Charities.
Special Features of Co-Operative Audit
Examination of overdue debts
Overdue Interest
Certification of Bad Debts
Valuation of Assets and Liabilities
Adherence to Co-operative Principles
Observations of the Provisions of the Act and Rules
Verification of Members Register and examination of their pass books
Reporting irregularities to the Registrar
Auditors of Multi-State Co-operative Society:
The following persons are not eligible for appointed as auditors of a Multi-State cooperative society:
A body corporate.
An officer or employee
a member
A person who is indebted to the Multi-State co-operative society
# First auditor or auditors of a Multi-State co-operative society shall be appointed by the board within one month of the date of registration.
#The subsequent auditor or auditors are appointed by Multi-State co-operative society, at each annual general meeting.
Power of Central Government to Direct Special Audit
CG can order for a Special Audit, Where the Central Government is of the opinion that:
Affairs Not Managed in Accordance With Prudent Commercial Practices
Managed as it would Cause Injury to Interest of Trade or Industry or Business
Financial Position is such as would endanger its Insolvency.
#CG shall order for special audit only if that Government or the State Government either by itself or both hold fifty-one percent or more of the paid-up share capital in such Multi-State co-operative society.
Inquiry & Inspection by Central Registrar
The Central Registrar may hold an inquiry or Inspection, on a request from
a federal co-operative to which a Multi-State Co-operative society is affiliated or
a creditor or not less than one-third of the members of the board or
not less than one-fifth of the total number of members of a Multi-state co-operative society.
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