Bihar Cooperative Societies Act,1935

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Ethelbert Carr
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1 SALIENT FEATURES OF BIHAR COOPERATIVE SOCIETIES ACT, 1935 AND BIHAR SELF- SUPPORTING COOPERATIVE SOCIETIES ACT, 1996 Bihar Cooperative Societies Act,1935 AUDIT As per Section 33 of the Act the Registrar shall audit or cause to be audited by some person authorized by him by general or special order in writing in this behalf the accounts of every registered society once at least in every year. The audit shall be conducted according to the rules, and shall include an examination of overdue debts, if any, the verification of the cash balance and securities and valuation of the assets and liabilities of the society. The auditor shall submit a report on such examination, verification and valuation, and shall include in his report a statement of Every transaction which appears to the auditor to be contrary to law or to the rules or bye-laws of the society; The amount of any deficiency or loss which appears to have been incurred by the culpable negligence or misconduct of any person; The amount of any sum which ought to have been but has not been brought into account by any person; and Any money or property belonging to the society which has been misappropriated or fraudulently retained by any person taking part in the organization or management of the society or by any past of present officer of the society or any other person.

2 Special Provisions of the Act for Short Term Co-operative Credit Structure (Overriding Effect) Section 2(l) Short Term Co-operative Credit Structure includes the State Co-operative Bank (SCBs), Central Co-operative Banks (CCBs) and the Primary Agricultural Credit Societies. Section 2 (gggg) Primary agricultural credit society means a co-operative society, the primary object of which is to render assistance, financial or otherwise, to farmers, rural artisans and agricultural labourers and includes farmers service society and multipurpose co-operative society. Audit of accounts of SCBs and CCBs required to be conducted by a Chartered Accountant Selected from a panel approved by National Bank.

3 Bihar Cooperative Societies Rules, 1959 Records to be maintained: As per rule 54: Registers of members & shares As per rule 55: Account books, register and forms as may from time to time be prescribed by the Registrar As per rule 58: Statement of accounts (including balance sheet, profit & loss account and statement of receipts and expenditures) as may from time to time be prescribed by the Registrar Returns & Reports to be submitted: As per rule 56: In such form and within such time, as the Registrar may from time to time prescribe. As per rule 58: Statement of accounts to be submitted to Registrar and also produced before the auditor. Due Date: 3oth June (within 3 months of close of co-operative year) Audit: As per Rule 57: audit of accounts is required to be conducted. Scope of Audit As per Office of Registrar, Co-operative Societies, Bihar Patna Verification and Valuation of Assets & Liabilities Checking of Statutory Books, Books of Accounts, records/documents Checking and evaluation of Bad & Doubtful debts Checking of closing cash balance, securities, CRR, SLR, Time deposit investment, credit analysis, credit sanction and disbursement. Checking of Bank Reconciliation Statement

4 Checking of general ledger and subsidiary ledgers and reconciliation Fund Management, Profitability, Accounting policy and consistency with accounting policy Matters related to loan/outstanding of recovery and overdrawn Updated status, Checking of Deposit Guarantee Scheme and Securities Checking of Debtors, Profit & Loss A/c and inter-institution Accounts in case of cooperative Banks Checking of Income Tax Adjustment Assessment of responsibility in case of embezzlement/irregularities/misappropriation Review of two years comparative study of physical and financial development of society Evaluation of Compliance of last audit objections.

5 The Bihar Self- Supporting Cooperative Societies Act, 1996 An Act to provide for the voluntary formation of Cooperative Societies as Accountable, Competitive, self-reliant business enterprises, based on thrift, Selfhelp and mutual aid and owned, managed and controlled by members for their economic and social betterment and for the matters connected therewith or incidental thereto. Accounts and records to be maintained [Section 32] A copy of this Act with amendments made from time to time, The minutes book, Registration certificate and a copy of the registered bye-laws and for the amendments registered from time to time with date of amendment. A copy of the authenticated by-laws of the federation/union of which it is a member and for each of its member Cooperative Societies. Account of all sums of money received and expended by the Cooperative Society and their respective purposes. Account of all purchases and sales of goods by the Cooperative Society, Account of the assets and liabilities of the Cooperative Society. A register showing total membership and the member-wise use of various services, A list of members with voting rights for the current year updated within thirty days of closure of the financial year, Copies of the board policies, Annual report, audit report, special audit report and their compliances. Copies of other laws and regulations to which the Cooperative Society is subject,

6 Such other documents as are relevant to the functioning of the society. Audit [Section 33] Audit of accounts required to be conducted by an auditor selected from the panel prepared by federation. Such Auditor shall either be a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 or form the office of the Registrar. The auditor s report shall also include report on: Attendance at meeting by directors, Loans and advances sanctioned to or the business done with the Cooperative Society by the directors, Expenditure of board meetings, Remuneration pain to directors, Expenses reimbursed to directors, Expenditure on education and training for members, staff, directors and others. Annual Financial Statements to be prepared & presented for Audit: Within 45 days of closure of the financial year Where a Cooperative Society fails to get its annual account audited when due, it shall be the responsibility of the Cooperative Union/ Federation to get the accounts of the Cooperative Society audited within a period of ninety days from the date when the audit was due. If the Cooperative Union/Federation is unable to get the audit of the Cooperative Society conducted for any reason, the Registrar shall get the accounts of the Cooperative Society audited.

7 Special Audit [sec.34] A Cooperative Society dealing with funds from the Government or other external individual or institution may be subject to a special audit initiated by the Registrar. Scope of Audit to be taken care of: Every payment which appears to the auditor to be contrary to law, The amount of any deficiency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of duties, The amount of any sum received which ought to have been accounted for but is not brought into account by any person, and Any material impropriety or irregularity which he may observe in the expenditure or in the recovery of money due. Due date for submission of Audit Report: Within 120 days of commencement Filling of Returns [ Section 35] Documents/Information to be filled with the Registrar: Annual report of activities. Audited statements of accounts. Plan for surplus disposal as approved by the general body. list of names of directors and their terms of office, list of amendments to the bye-laws of the Cooperative Society, declaration regarding date of holding of general body meeting and conduct of elections where due,

8 Compliance report relating to audit/ special audit/enquiry. Due Date: Within 5 months of the Close of the year

Audit of Co-operative Societies

CHAPTER 13 Audit of Co-operative Societies Question 1 An auditor of a Cooperative Society governed by Cooperative Societies Act, 1912 is required to attach schedules giving certain information. Please