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Pankaj Tyagi
| Updated: 16 Oct, 2020 | Category: Society

A Guiding Manual on Appointment Process of Auditors & It’s Roles under Co-operative Society

on Appointment Process of Auditors & It’s Roles under Co-operative Society

A co-operative society is formed by the mutual consent of individuals that comes from the same class of society. Instead of working for public welfare like NGOs, these societies are dedicated to benefits its members only. The members of the co-operative society work as a cohesive unit to eliminate capitalist exploitation and to improve their financial situation. Since these societies invest in outside sources, their accounting structure attracts in-depth auditing periodically. In this article we will unfold some fact related to Appointment Process of Auditors.

The bylaws that govern the working of Co-operative society also mandate the requirement for account auditing. Such investigation is led by the authorized person, aka as auditor which is usually appointed by the Registrar of the company. In this blog, we will strive to unfold some facts regarding the appointment of the auditor of a cooperative society.

Who is Eligible to Conduct an Audit of Co-Operative Society? 

The auditing process can be led by the certified auditors appointed by the registrar. Apart from this, let’s figure it out the eligibility criteria to conduct an Audit of Co-Operative Society, which are as follows:-

  • Any person from the panel of the certified auditor is managed by the registrar. 
  • Chartered Accountant complying with the norms of Chartered Accountants Act, 1949[1].
  • A person having a government diploma in the relevant field such as cooperative accounts and accountancy. 
  • A person having prior experience in auditing and worked as an auditor in the Cooperative Department.
  • A person whose name is included in the panel of certified auditors handled by the registrar. 

Read our article:Appointment of Auditor – Companies Act, 2013

Appointment Process of Auditors for Co-operative Society

The following section will clarify the notion of Appointment Process of Auditors

  • The registrar reserves the right to appoint an auditor or the auditor can be appointed by the Chartered Accountant. 
  • The general body can appoint a statutory auditor, meanwhile, the managing committee holds the right to appoint an internal auditor. You should keep in mind that such an appointment cannot be done without the prior consent of the members.   
  • The auditor can serve the term of one year from the date of the appointment. 
  • The newly incorporated society needs to appoint the auditor at the first AGM. The appointment can be done for a maximum of 3 consecutive years. 
  • The decision regarding the re-appointment of the auditor shall be taken in a general meeting or else the registrar can be intimated to serve such a purpose. 
  • The appointment of the auditor seeks a writ declaration from the auditor to authenticate the process.

In general, the appointment of Statutory Auditor is done in the Annual General meeting under the supervision of core members.  In state of urgency, the same task can be addressed by the registrar itself.

Role of the Auditor

Role of the Auditor

Auditor’s Checklist Representing the Investigation

The following section represents the checklist of the elements that usually investigate by the auditor:-

  • A number of shares held by each member of society. This usually is done by checking the membership registers. 
  • Existing expenses, assets, cash available at the society. Auditors generally verify these elements on the ground of standard accounting principles. 
  • Balance sheet and P&L account 
  • Bank and cash book.

Apart from audit, the charted accountant who is acting as an auditor can perform other activities such as providing assistance in account writing, deployment of accounting system, internal audit, taxation , and managerial accounting services.

Memorandum of Audit

The audit is responsible for submitting an audit memorandum to society. The same shall also be forwarded to the registrar in the prescribed format by the referred by the registrar. The memorandum must enclose the following detail: 

  • The books of the accounts are prepared as per the bylaws of the society.
  • The balance sheet and P&L account examined by the auditor are in sync with returns of society and books of accounts.
  • Transaction details, particularly those which aren’t in line with the provisions or the rules specified by the society’s law. 
  • Details of mandatory transactions that is not present in the account book.
  • Detail of the due amount or irregularity in the expenses addressed by society. 
  • Detail regarding suspicious debts. 
  • Other relevant facts as mentioned by the registrar.
  • Summary of the audit memorandum

Key Takeaways

  • The registrar also reserves the right to appoint the auditor for the societies underpinned by the fiscal aid and assurance of state government. 
  • The institute of chartered accountant of India not engaged with activities through which they can render audit certificate to societies.
  • Every qualified CA i.e. Chartered accountant is eligible to perform audit related activities in cooperative societies.
  • The auditor can serve the term of one year from the date of the appointment. 
  • The newly incorporated society needs to appoint the auditor at the first AGM. The appointment can be done for a maximum of 3 consecutive years. 
  • The decision regarding the re-appointment of the auditor shall be taken in a general meeting or else the registrar can be intimated to serve such a purpose. 
  • The general body can appoint a statutory auditor; meanwhile, the managing committee holds the right to appoint an internal auditor. You should keep in mind that such an appointment cannot be done without the prior consent of the members.   
  • Appointment Process of Auditors is primarily depends on the board members.

On the completion of the audit, the auditor shall award a letter to the society whose account has been scrutinized by the auditor in the pursuant to the guidelines mentioned by the registrar from time to time. The society’s list mentioned under sub-section (3) of Section 12 also shows the audit class of the society. 

Conclusion

Hope this display of information has boosted your understanding and strengthens your concept regarding the Appointment Process of Auditors. In case if you seek some additional information for the same, kindly head over to the comment section and drop your queries. We will strive to respond to your queries as quickly as possible. You can also contact us in case if you seek co-operative society registration without confronting any unnecessary process. 

Read our article:What is Form B of Society Registration? Get all the updates on cooperative housing society

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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