Introduction
An audit of a cooperative society in India is a process of examining the financial statements and records of the society to ensure that they are accurate, reliable, and in compliance with applicable laws, regulations, and accounting standards. Cooperative societies are governed by the Cooperative Societies Act, which sets out the legal framework for their formation, management, and dissolution.
Cooperative societies are member-owned organizations that are established to provide various services and benefits to their members, such as credit, marketing, housing, and consumer goods. They are registered with the Registrar of Cooperative Societies in their respective states and are required to maintain proper books of accounts and undergo regular audits.
The audit of a cooperative society in India is typically carried out by a Chartered Accountant (CA) who is appointed as an auditor by the society's management committee or board of directors. The auditor's role is to examine the financial statements of the society, including the balance sheet, income statement, and cash flow statement, to ensure that they are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and are free from material misstatements or errors.
During the audit process, the auditor may also review the society's internal controls and risk management processes to identify any weaknesses or deficiencies that may pose a risk to the society's financial health. The auditor may also review the society's compliance with applicable laws and regulations, including tax laws, cooperative laws, and other relevant statutes.
At the end of the audit, the auditor prepares an audit report, which includes an opinion on the accuracy and reliability of the financial statements, and any observations or recommendations for improvement. The audit report is then presented to the society's management committee or board of directors, who are responsible for addressing any issues or deficiencies identified by the auditor.
In summary, the audit of a cooperative society in India is an important process for ensuring transparency, accountability, and good governance in these organizations. It helps to safeguard the interests of the society's members and other stakeholders by providing assurance that the society's financial statements are accurate, reliable, and in compliance with applicable laws and regulations.
Special Features of Cooperative Society Audit
The special features of Cooperative society audit are:
- Examination of overdue Debts
- Overdue interest
- Certification of bad debts
- Valuation of assets and liabilities
- Adherence to cooperative principles
- Observations of the provisions of acts & rules
- Furtherance to public welfare & safeguarding of public funds
- Assessment of damages
- Adherence to accounting principles, accounting & auditing standards
- Special report to registrar
- Audit classification of society
- Discussion of report with the managing committee
Provisions for Appointment of Auditor of Cooperative Society
Under the Companies Act, 2013, the appointment of an auditor for cooperative society audit is governed by the provisions of the Cooperative Societies Rules, 2021.
Here are some key provisions related to the appointment of an auditor for cooperative society audit under the Companies Act, 2013:
- Appointment by members: The auditor of a cooperative society is appointed by the general body of members of the society, as per the provisions of the cooperative society's bylaws.
- Eligibility criteria: The auditor of a cooperative society should be a chartered accountant or a firm of chartered accountants. Additionally, the auditor should not be a member or a creditor of the cooperative society or its subsidiary or holding company.
- Term of appointment: The auditor of a cooperative society is appointed for a term of five years, which can be extended for another term of five years.
- Rotation of auditors: The same auditor cannot be reappointed for two consecutive terms of five years. After the completion of two terms, the auditor has to take a break of five years before they can be reappointed.
- Special resolution for removal: The auditor of a cooperative society can be removed before the completion of their term only by a special resolution passed by the general body of members. The auditor has to be given a reasonable opportunity to be heard before their removal.
- Intimation to Registrar: The cooperative society has to inform the Registrar of Cooperative Societies about the appointment, reappointment, or removal of the auditor within 15 days of such an event.
Overall, the Companies Act, 2013 provides a clear framework for the appointment of an auditor for cooperative society audit, ensuring transparency and accountability in their financial management.
Frequently Asked Questions
What are the key objectives of Cooperative Society Audit?
The key objectives of a cooperative society audit are to ensure that the financial statements are true and fair, and that the cooperative society is complying with applicable laws and regulations.
What are the responsibilities of Cooperative society Auditor?
The responsibilities of a cooperative society auditor include conducting an audit of the society's financial statements, verifying the accuracy of the accounts, and reporting any discrepancies or irregularities to the general body of members or to the board of directors.
How often does a cooperative society require an audit?
The frequency of a cooperative society audit may vary depending on the country and the specific laws and regulations that apply. In some countries, a cooperative society may be required to conduct an audit every year, while in others, the frequency may be less frequent.
Can a cooperative society auditor be removed before the completion of their term?
Yes, a cooperative society auditor can be removed before the completion of their term by a special resolution passed by the general body of members. However, the auditor has to be given a reasonable opportunity to be heard before their removal.