Rights and
Duties of the Auditor in case of audit of co-operative society
The auditor of a Co-operative Society has a
right to examine the books and vouchers of the business to enable his to
satisfy himself whether or not the balance sheet is drawn up, so as to exhibit
a true or fair view of the state of affairs of the business, according to the
best of his information and explanation given to him. To enable him to perform
his duty, the auditor should take the following steps:
1. He should study the Co-operative
Societies Act, 1912, and the bye-laws of the society concerned.
2. He should seen that member does not hold
more than ten percent of the capital of the society.
3. He should vouch the receipt of cash on
account of deposits with the cash book, counterfoils of the receipt book and
compare them with the relative accounts.
4. He should vouch the money borrowed from
the Central Co-operative Bank with the Cash Book, correspondence and resolution
passed by the Managing Committee of the Society to borrow money, the period,
the rate of interest , etc.
5. Interest received from borrowers or
return of loan from them should be vouched with the agreement entered into
between the society and the borrower, regulations of the society, counterfoils
of the receipt book, cash book, etc.
6. Loans to the members should be vouched
with the agreement, regulations and the resolution passed by the Managing
Committee, receipt issued by the member concerned, cash book, etc. If under any
circumstance, loan has been granted to a non-member, he should seen whether
permission had been obtained from the Registrar of Co-operative Societies for
the grant of loan.
7. He should examine the over-due debts, if
any.
8. He should vouch the expenses as usual.
9. He should seen that first 25 percent of
the profits of the society are carried to the Reserve Fund and ten percent are
carried to the Welfare Fund.
10. Cash in hand should be vouched by
actually accounting the cash and comparing it with the cash book.
11. Investments should be verified by
inspecting them and comparing them with the Investment Account in the ledger.
12. Surplus funds of a co-operative society
can be invested only in Government Saving Banks or any other bank which is on
the approved list of the Registrar or Co-operative Societies. The auditor
should see that the investments are in accordance with the rules.
13. If it is a consumers society, the
auditor should check the sales summaries with the sales. He should check the
purchases with the order book, the stock book etc. He should verify the stock
and examine the method of valuation.
14. He should see that the accounts of the
society are prepared according the Co-operative Societies Act and the
provisions of the Income Tax Act as applicable to the Co-operative Societies
have been followed.
15. The Balance Sheet and Profit and Loss
Account are to be drawn up in accordance with the pro forma which is prepared by the chief auditor of Co-operative
Societies of the State in which the society is registered, given under Part V,
Third Schedule, S. 56 of Banking Regulation Act, 1949.
16. He should satisfy himself whether or not
the balance sheet is properly drawn up so as to exhibit a true and fair view of
the state of affairs of the business according to the best of his information
and explanation given to him.
17. The Registrars of Co-operative Societies
of certain States have prescribed a pro
forma for drawing up the auditor’s report and the final accounts. The
auditor should see that his report, etc. is according to the pro forma.
18. He should see that the Cash Reserve is
according to Section 56(i) of Banking Regulation Act.
19. Furniture and Stationery should be
physically verified and compared with the Stock Register.
20. He should pay attention to the over-due
debts, if any, valuation of assets and liabilities of the Society.
If may be stated here that the audit of
co-operative banks is more detailed as compared to commercial banks because the
internal check system is not in operation in the case of co-operative.
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