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.