It’s time for audit! I am sure most of the societies are now busy with connecting / follow-up with their accountant to complete the accounting work of last financial year so as to schedule the annual audit for the last financial year.
Before we discuss the some of the key points each society needs to care about, let’s see what’s the legal position as per society bye-law and Maharashtra Cooperative Society Act’1960;
Legal Position
Rule 151 to 153 of the Housing Society Bye-laws deals with the “Audit of Accounts of the Society”.
The Statutory Auditor should be appointed by the General Body in its Annual General Body meeting, who should be from the panel of the auditor approved by State Government in accordance with Bye-law 151(a) (provide the list of Maharashtra State Government approved auditor). In the same meeting they should also fix the remuneration of the Auditors so appointed. The Statutory auditor shall submit his audit report as provided in section 81 of MCS Act’1960.
At present the scale of Audit fees is as per circular No. CC/ADT dated 15-5-1992 issued by the Commissioner for Co-operative & Registrar, Co-operative Societies, and Maharashtra State Pune and is as under.
- For Societies located within the Corporation area and cantonment areas, Rs.36/- per member
- Municipal Towns – Rs.24 per member
- Village Level – Rs.12 per member
The Managing Committee should ensure to complete the Account’s audit within a period of six months from the closure of the financial year and in any case before the issuance of notice of holding of the Annual General Meeting in line with Bye-law 151(b).
While it is not necessary to appoint an internal auditor [Bye-law 151(C)] but it is advisable to appoint a member who understand the accounts as “Internal Auditor” to ensure quick & smooth statutory audit, at the Annual General Body Meeting.
As per Bye-law 152 it is the responsibility of the secretary to produce or cause to be produce all the books, records, receipt etc. before the Internal Auditor and the Statutory Auditor.
Bye-law 153 provides that the secretary should prepare the draft audit rectification report on the objections raised and suggestions made in Form “O” as prescribed under Rule 73 of the MCS Rule, 1961 basis the audit report received from the Statutory and Internal Auditors (if any) and discuss in the next managing committee meeting held after the date of receipt of the audit report, for its approval. The committee shall submit the Audit Rectification report to the registrar and the Annual General Body meeting of the society.
Important Dates for Cooperative Society Accounts, Audit & Returns
| Important Date | Activity | Clause / Rule / Provision |
| 31st March | Closing date of Financial Year | |
| 15th May | Finalization of Accounts | MCS Rule 61 |
| 16th May – 31st May | Accounts Statement Open for Members | MCS Rule 61 |
| 1st June | Accounts to be handed over for audit | MCS Rule 61 |
| 31st July | Audit Completion | Sec 81 of MCS Act 1960 |
| 31st August / 15th September | Audit Report Upload i.e Before Issue of AGM Notice | Sec 81 of MCS Act 1960 |
| 30th September | Conduct AGM before this date as no extension is permitted even by Registrar. | Sec 75 of MCS Act 1960 |
| 30th September | Mandatory Annual Returns by Society – 6 Types of Reports to be submitted. – Appointment of Auditor within one month of AGM | Sec 79 (1A) Sec 79 (1B) |
| 31st October | Mandatory Return by Society about appointment of auditor within one month from the AGM date and generate E-order other Returns as per Commissioner Circular Date 22/08/2015 | Sec 81 & Sec 79 (1A) of MCS Act 1960 |
| Income Tax Return | ||
| 1st Nov – 31st Jan | Audit rectification Report by Society within 3 months from the date of submission of report by Auditor. | Sec 82 of MCS Act 1960 |
| Rectification Report to be uploaded by Auditor through Auditor Login once received by society. | Sec 82 of MCS Act 1960 |
Auditors Report
The Auditor Report is to be submitted to the society and a copy of the same to the Registrar and Federation of the Housing Societies concerned immediately on completion of the audit. In addition to the statutory report which is the same as the one given in the case of the audit of limited companies the auditor of the Co-operative Housing Society has to append thereto a further detailed report which can be divided into the following parts:
- In Form 1 and Form 28 (Audit Memos)
- The Form 1 requires information in respect of the name, address of the Society, period of audit, audit classification for the year and previous 3 years, no. of members and their classes, details regarding members and the registers of share capital, outside borrowings, meetings, breaches of Bye-laws, Rules and the Act, Income and Expenditure Account, Cash and Bank Balances, Securities, Assets and whether the draft audit memo was discussed at the managing committee meetings.
- Form 28 is applicable only to Housing Societies and requires information regarding borrowing, repayments, government assistance, membership, Land and Building, Member’s Contributions and their adequacy or otherwise, loans to members and whether the expenditure is approved of from time to time.
- Auditor’s General Remarks and Suggestions Part I
Part I deals with the auditor’s general remarks and suggestions regarding the society’s working, objects and policies, progress of the society, borrowings and repayments, adherence to the terms of loans, impractical, illegal and/or harmful resolutions passed at the various meetings, comments on the Balance Sheets, and Income & Expenditure Account, Books of Account, staff members, cases of arbitration, Rectification Reports and classification of Society and reasons therefore.
- Auditor’s General Remarks and Suggestions Part II
Part II deals with the mistakes, errors, inadequacies and omissions in the books of account and vouchers.
Action on auditor’s report
Defects in the working of the society pointed out by the auditor appointed to audit the accounts of the Society under section 81 are to be rectified and irregularities are to be remedied by the Society within three months from the date to the audit reports.
- Rectification Report
When the order is issued under Section 82, directing the society to rectify the defects, the Society has to submit a rectification report to the Registrar and Auditor in Form ‘O’. See Rule 73
- Failure to rectify
If the Society fails to rectify the defects disclosed in the course of or as a result of the audit, within the time specified by him, the Registrar may himself take steps to have the defects rectified and may recover the costs from the officer or officers of the society whose duty was to rectify them – Section 87(4).
