Audit

   25-05-2019 -       UMESHCHANDRA YADAV -       no comment.

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1. How is an internal auditor appointed?

Ans: The society, if it considers necessary, may appoint an internal Auditor, at the Annual Meeting of the General Body and fix his remuneration to audit the accounts of the Society.

2.  When are the accounts to be finalized?

Ans: Within 45 days of the close of every co-operative year, the Secretary of the society or any other person, authorised by the committee in that behalf, has to finalize the accounts of the preceding co-operative year, prepare the Receipts and Payments Statement, the Income and Expenditure Statement for the said year and the Balance Sheet as at the close of the said year in the forms prescribed under Rule 62(i) of the MCS Rules, 1961 along with the list of members, as at the close of the preceding co-operative year, with amounts to their credit in the share capital account and deposits if any, the schedules of investment, the debtors, the creditors, the furniture, the fixtures and the office equipments etc.

3. What is a provision regarding audit of the Co-operative Housing Society?

Ans: Co-operative Housing Society can get done their society’s audit by appointing certified Auditor or by appointing Chartered Accountant under Section 81 and by taking approval of the General Body Meeting to such appointment. However it is obligatory on those Housing Societies who have received financial assistant from the Government, that such housing society’s audit should done from the auditor appointed by the Registrar. Similarly the those housing societies which are problem ridden, or having frequent complaints of malpractices for them it is obligatory that they should have to get audit of their societies from the Government Auditor or Auditor appointed by the Registrar. Similarly responsibility of the audit can be given to the Government or Registrar appointed auditor in respect of those societies which are problems ridden and having frequent complaints of malpractice. In such a situation order of appointing auditor is issue by the competent officer from co-operation department under Section 81 and then are obligatory on Society.

4.  What is a provision in the law regarding re-audit of the society?

Ans: If it came to the notice of the Dy./Asst. Registrar of the societies that by conducting primary enquiry of re-auditing application received from the members of the society or society that in prima facie it is necessary to conduct re-auditing, then by sending such a report to the competent Officer of the co-operation department, the action of re-checking audit of the society can be conducted.

5.  What is a Co-operative Year?

Ans: A Co-operative Year will be the accounting year of the society that will commence on 1st April and end on the 31st March of every year.

6. What amounts can be written off?

Ans: Subject to the Bye-law No. 151, the society can write off any loan and interest thereon like for example, Society’s charges due from the members, the expenses incurred on recovery thereof and the accumulated losses, which are certified as irrecoverable by the Statutory Auditor.

7. Who is responsible for maintaining the account books, registers and other records, etc.?

Ans: It is the responsibility of the Secretary of the Society to maintain and keep up to date the account books, registers and other records mentioned under the Bye-law Nos. 142 and 143, unless otherwise decided by the Committee.

8. How are the books and records to be produced for audit?

Ans: The Secretary of the Society has to produce or cause to be produced all the books, registers, records before the internal auditor and the Statutory Auditor, in the office of the Society or where the records are normally kept and also has to furnish such information as may be required by him for the conduct of the audit of the accounts of the Society.

9. What is the prescribed limit for maintaining cash in hand?

Ans: The Secretary of the Society or the paid employee, authorised by the Committee in that behalf, can retain in his personal custody, at the close of every day, a sum, not exceeding Rs.300/- (Rupees Three Hundred only), for petty expenses. If due to unavoidable circumstances, the cash on hand has exceeded the above limit, the excess cash has to be credited into the bank within the next 3 days by the Secretary or any other person authorised by the Committee to keep cash on hand.

10. What id the provision in the law regarding faults rectification of the auditor of Society?

Ans: To submit the faults rectification report within three months of receiving the audit report of the society to the concerned Dy/ Asstt. Registrar and to the Auditor by the society is obligatory. Thereafter it is necessary that the auditor of the Society by noting remarks that whether the fulfilment of the faults have been made satisfactorily or not and submit it again to the concerned Dy. /Assistant Registrar. Thereafter the Dy/ Asstt. Registrar may give orders under section 82 to the society that how the faults which are not fulfil satisfactory can be fulfil within stipulated period. However before to give such orders it is necessary to give hearing to the society and consider the observations of the Housing Federation.

11. Is there any limit for payments to be made beyond a certain amount?

Ans: All payments in excess of Rs. 1500/- have to be made by means of crossed A/c Payee Cheques only.

12. What is an audit rectification report?

Ans: The Secretary of the Society has to prepare a draft audit rectification report on the basis of the objections raised and suggestions made, in the form ‘O’ prescribed under Rule 73 of the MCS Rules, 1961 once he receives the audit reports from the Statutory and Internal Auditors. Then he has to place the same before the meeting of the Committee, held next after the date of the receipt of the audit reports, for its approval. Further action on the audit rectification report is taken as provided under the said Rule.Tested.

13. What is the amount of contribution to be made to the Statutory Reserve Fund of the Society?

Ans: After providing for interest upon any loans and deposits and after making other deductions as required under Section 65(1) and 66 of the MCS Act, 1960 and Rule 49A, of MCS Rules, 1961, twenty five percent (25%) of the net profit of all the business carried on by or on account of the society has to be placed at the credit of the Reserve Fund of the Society.

14. How is the remaining profit of the Society to be distributed?

Ans: The remaining 75% of the net profit of the society is to be utilized as provided under Rule 50, 51, 52, 53:

i. To pay divided not exceeding 15 per cent per annum, upon the paid up share capital at such rate as the Committee may recommend and the Annual General Body Meeting may approve. The dividend on the shares shall be paid to the registered holders of such shares according to the books of the Society as on the last day of the preceding Co-operative year.

ii. To pay honorarium to office-bearers of the Society not exceeding 15 percent of the net profit to reward them for the sacrifice of their valuable time for the working of the Society. However, the office bearer may take such amount of annual limit 15% or Rs. 2000/-, whichever is less.

iii. To allocate to a common welfare fund, such part of the profit, as the Annual Meeting of the General Body may determine to be utilised in furtherance of the objects specified in the Bye-law No. 5(d).

iv. The balance, if any shall be carried forward or dealt with in such manner as the Annual Meeting of the General Body, on the recommendations of the Committee, may determine.

15. What is a provision in the law for giving directions to the housing society for obeying the legitimate orders and other matter?

Ans: A. If the co-operative housing society is not keeping the record of the financial transaction books properly then the concerned registrar can give direction to the sousing society under section 79(1) for maintaining property income and expenditure transaction record and to submit regular information to the registrar’s office from time to time in this regard and to fulfill the directions in the specified time limit.

B. Many a time societies are not obeying orders given under section, 22, 23 or the legitimate orders. In such time, directives are given under section 79(2) by mentioning stipulated time limit for obeying these orders issued under section and bye-laws of co. operation law and by the registrars under section 23 and 23 etc., and if these directive are not obeyed then implementation of there can be made by appointing authorized offence and through him.

C. After taking action against responsible office bearer by appointing authorized officer under section 79(2) the registrar can give directives to deposit the penalty amount at the rate of Rs. 25/- per day for the action not taking days in the government treasurer under section 79(3). And for giving such directives, action to nullify the member of the managing committee from the office under section 73FF and section 78 by disqualifying him can be taken.

D. If the society denied giving various no objection certificate and if such type of complaint received then by taking hearing the action to give direction can be taken under this section.

16. Whose responsibility it is to give record to the Auditor?

Ans: Since the responsibility to keep the record up to date is of the Secretary of the Society, the responsibility to make available the record to the Statutory Auditor is entrusted to the Secretary of the Society.


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