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Importance of auditor for housing societies

Friday, October 27, 2017

The implementation of GST will impact the financial dealings of housing societies as well. Vishwasrao Sakpal thus looks at the role of the auditor in detail

In any co-operative housing society, there are two most important functions to manage. First administration and second finance or fund. While handling the administration part, it is mandatory to comply with the provisions of co-operative societies act, rules and the new model bye-laws by the managing committee. Whereas, any irregularities in accounts, mis-management of societies funds/investments and violation of provisions of act, rules and the new model bye-laws is the responsibility of an Auditor. It is prime function of an Auditor to investigate the irregularities in accounts and identify the person/s responsible for the mis-management. “Audit" is the mirror of your sociey. It gives a true picture of your society.

Importance of audit
The Registrar shall audit, or cause to be audited at least once in each co-operative year, by a person authorised by him by general or special order in writing in this behalf the accounts of every society which has been given financial assistance including guarantee by the State Government. The societies shall arrange to get their accounts audited, at least once in each co-operative year by an auditor from the panel of auditors maintained by the Registrar, or by a  chartered accountant holding a certificate in co-operative audit issued by the Institute of Chartered Accountants of India. Provided that the Registrar may, for reasons to be recorded in writing, audit or cause to be audited accounts of any such societies or any year and at any time.

The audit shall include examination or verification of the following items :--

Over dues of debts, if any;

Cash balance and securities and a valuation of the assets and liabilities of the society;

Whether loan and advances and debts made by the society on the basis of security have been properly secured and the terms on which such loans and advances are made or debts are incurred are not prejudicial to the interest of the society and its members;

Whether transactions of the society which are represented merely by book entries are not prejudicial to the interest of the society;

Whether loans and advances made by the society have been shown as deposits;

Whether personal expenses have been charged to revenue account;

Whether the society has incurred any expenditure in furtherance of its objects;

Whether the society has properly utilised the financial assistance granted by Government or Government undertakings or financial institutions, for the purchase for which such assistance was granted;

Whether the society is properly carrying-out its objects and obligations towards members.
a)    The auditor appointed shall have the right to receive all notices and every communication relating to the annual general meeting of the society and to attend such meeting and to be heard there at, in respect of any part of the business with which he is concerned as auditor.

b)      The auditor shall submit an audit memorandum duly signed by him to the society and to the Registrar in such form as may be specified by the Registrar, on the accounts examined by him and on the balance sheet and profit and loss accounts as on the date and for the period up to which the accounts have been audited, and shall state whether in his opinion and to the best of his information and according to the explanation given to him by the society the said accounts give all information required by or under the act and present the true and fair view of the financial transaction of the society.

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