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Advanced Auditing

Notes 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-sections (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.
The following points should be kept in mind in connection with the audit of a co-operative
society:
1. Qualifications of Auditors: Apart from a chartered accountant within the meaning of the
Chartered Accountants Act, 1949, some of the State Co-operative Acts have permitted
persons holding a government diploma in co-operative accounts or in co-operation and
accountancy as also a person who has served as an auditor in the co-operative department
of a government to act as an auditor.
2. Appointment of the Auditor: An auditor of a co-operative society is appointed by the
Registrar of Co-operative Societies and the auditor so appointed conducts the audit on
behalf of the Registrar and submits his report to him as also to the society. The audit fees
are paid by the society on the basis of statutory scale of fees prescribed by the Registrar,
according to the category of the society audited.

Example: The audit fees of co-operative credit society and Urban Co-operative Banks are
to be calculated with reference to working capital at the prescribed rates. ‘Working Capital’ here
means funds at the disposal of the society inclusive of paid up share capital, funds built up out of
profits and monies raised by borrowing and by other means.

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