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Unit 13: Audit of Banking and Insurance Company

and guidance is to be given by the Co-operative Auditor for improvement of the Co-operative Notes
Institution in the light of this background. The Co-operative Audit is thus not merely a financial
audit. It involves Administrative Audit also.
13.2.6 Statutory provisions relating to Co-operative Audit

Audit of Co-operatives is conducted as per provisions of Section 63(1) of the Karnataka
Co-operative Societies Act, 1959. According to this section:
“Every Co-operative society shall get its accounts audited at least once in each year by the Director of Co-
operative Audit or by a person authorized by him by general or special order in writing in this behalf.”
Section 63(4) provides that every person who is or who has at any time been, an officer or
employee of the society and every member and past member of the society, shall furnish such
information in regard to the transactions and working of the society, as the Director of
Co-operative Audit or the authorized person may require.
Under sub-section (3) of Section 63 the Director of Co-operative Audit or the authorized person
shall at all times have access to all the books, accounts, documents, papers, securities, cash and
other properties belonging to or in the custody of the society and may summon any person in
possession or responsible for the custody of any such books, accounts, documents, paper, securities,
cash or other properties, to produce the same at any public office, at the headquarters of the
society or any branch thereof.

According to section 63(2)(12)(13)(14) of the KCS Act, 1959 read with Rule 22 and Rule 29(1) of the
KCS Rules, 1960 the audit of the accounts of every Co-operative Society should include the
following:
1. Examination of overdue debts, if any, verification of the cash balance and security and
genuineness of advances, ensuring of personal expenses not being charged to revenue
account valuation of the assets and liabilities and an examination of the working and the
other prescribed particulars of the society.

2. To certify that whether the financial statements prepared by the society gives a true and
fair view about the state of affairs of a co-operative society as at the end of the year. And
also to report those proper books of accounts have been kept by the society so far as
appears from his examination of those books and proper returns adequate for the purpose
of his audit.
Any of the matters referred to in sub-section (13) and (14) is answered in the negative or with a
qualification, the auditor shall state the reason for the answer in his audit report.

Section 63(5) of the KCS Act requires communication of the result of audit to the society, the
Registrar and to the financing Bank or Credit Agency and if the society is affiliated to any other
society, to such society.
Under Rule 30 of the KCS Rules every Co-operative Society shall pay to the State Government
a fee for the audit of its accounts for each Co-operative year in accordance with the scale fixed by
the Director with the previous approval of the State Government in respect of the class of
societies to which it belongs.

13.2.7 Main Features of Co-operative Audit

The main features of Co-operative Audit relate to the following:
1. Adherence to Co-operative Principles
2. Observance of provisions of Act, Rules and bylaws.

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