Appointment of Auditor of Co-operative Society

Narendra Kumar

03 Jun, 2019

The accounts of the credit cooperative society shall be audited by the auditor appointed by co-operative society. The audit includes annual or periodical audit, continuous or concurrent audit and test or super audit and re-audit.

Who shall conduct an Audit of the Co-operative Society?

• The audit shall be conducted by the Departmental Auditors or by the certified auditors appointed by the Registrar.
• The Registrar may ask any society or class of society to appoint an auditor from the panel of certified auditors maintained by the Registrar and published by him in the Official Gazette.

Who is Certified Auditor for Co-operative Society?

Certified Auditor includes and eligible to be appointed as auditor in cooperative society:

• Chartered Accountant within the meaning of the Chartered Accountants Act, 1949.
• The person who holds a Government Diploma in co-operative accounts or a Government Diploma in co-operation and accountancy.
• The person who has served as an auditor in the Co-operative Department of the State Government, and whose name has been included by the Registrar in the panel of certified auditors preserved and published by him in the Official Gazette at least once every three years.

Procedure Appointment of Auditor in Co-operative society:

• The registrar has the power to appoint an auditor by an order or auditor may be appointed form the panel of auditors maintained by the Registrar, or by a Chartered Accountant.
• Statutory Auditor is appointed by General Body whereas Internal Auditor can be appointed by the Managing Committee but the auditor should get his name and appointment circulated with the members.
• The Auditor of the society can be appointed for the term of one financial year.
• The Auditor shall be appointed at the first AGM of the Society and shall elect to be appointed for maximum three consecutive years.
• Every year the same auditor liable to re-appointed which is subject to the approval from General Meeting.
• In case no AGM is conducted in the financial year the society may ask the registrar to appoint the auditor from the panel.
• On the appointment of Auditor in the Society, Auditor shall give written consent.

Return of Appointment of Auditor:

• As per the provisions of the Society Act, the details of the appointment of Auditors along with the consent taken from auditor shall be uploaded to Department of a Co-operative site.
• The returns auditors details auditors details along with the consent shall be filed within 30 days from the date of AGM of Society.
• The Society shall upload details from society’s login.

A penalty for non-filing:

• If any society fails to file returns of Auditors details than a penalty of fine Rs. 5000/- is levied. A committee can also be disqualified.
• It will be assumed that no auditor is appointed and the right to appoint the auditor gets transferred to the Registrar and the Registrar will appoint the auditors for such societies.

Appointed Auditor name subsequently removed from the panel:

At the time of appointment or signing of a report, the Auditor shall be the member of the Panel. If subsequently his name is being removed from the Panel that he needs to inform to the Society and the same need to intimate to the Registrar by the Society. On receiving such intimation, the registrar shall appoint the auditor from the Panel.

Kindly take the note any audit conducted by the auditors whose name is removed from the panel subsequently is considered as invalid Audit.

Memorandum of Audit:

The auditor shall submit an audit memorandum to the society and to the Registrar in the form specified by the Registrar which shall contain the following:

• The auditor has obtained all the information and explanations which to the best of his knowledge;
• The books of accounts are prepared as required by the Act, Rules and the by-laws of the society;
• The balance sheet and profit and loss account examined by him are in contract with the books of accounts and returns of the society.
• Details of all transactions which is contrary to the provisions of the Act, the rules or the by-laws of the society;
• Details of all sums which should have been but have not been brought into account by the society;
• Details of any material impropriety or irregularity in the expenditure or in the realization of money due to the society;
• Any money or property belonging to the society which appears to the auditor to be bad or doubtful debts; and
• Other matters as specified by the Registrar.
• In the General Meeting of the Society, the summary of audit memorandum as prepared by the auditor shall be read.

On completion of his statutory audit, the auditor shall grant an audit classification letter to the society whose accounts he has audited in accordance with the instructions issued by the Registrar from time to time.