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State of Maharashtra - Section

Section 69 in The Maharashtra Cooperative Societies Rules, 1961

69. Procedure for appointment of auditors and for conducting audit.

- [(1) (a) The audit of accounts of the societies shall be conducted by the auditor or auditing firm appointed by the society in its annual general body meeting within the period specified in the Act, from the panel of auditing firms or auditors whose names are listed as on the date of annual general body meeting and is approved by the State Government or authority authorized in this behalf.Explanation. - For the purpose of this rule, Audit shall include annual, test, cost or performance, special and re-audit.(b)Audit of the society shall be completed within four months from the close of the financial year and the report, also in Compact Disc shall be submitted to the society and the Registrar as specified in sub-section (5B) of section 81 of the Act, and also Part A of audit report, audit certificate and audited financial statements shall be uploaded by auditor on official website of Co-operation Department :Provided that, Apex Societies shall submit copies of audit report as specified by the Registrar to be laid before the State Legislature.(c)Every apex society shall submit to the Registrar, required copies of audit memorandum in both Marathi and English, in print and compact disk form within sixty days from receipt of audit memorandum from the auditor of the society for each financial year. The Registrar shall submit these copies of audit memorandum received from such society to the State Government to be laid before the State Legislature :Provided that, if any apex society fails to submit required copies of audit memorandum as mentioned in clause (c) of this sub-rule in due time, the said society shall submit reasons thereof in writing to the Registrar. The Registrar shall submit reasons in writing received from the said society to the State Government to be laid before the State Legislature.(d)Before appointing the auditor or the auditing firm, the society shall ensure that, the auditor or the auditing firm proposed to be appointed for conducting its audit has not accepted the societies for audit exceeding the limit prescribed under the Act.(e)Qualifications and experience of the auditor shall be as specified in Explanation - I to sub-section (1) of section 81.(f)The Registrar shall prepare, declare and maintain the panel of auditors and auditing firms from time to time in the following manner,-(i)the Registrar shall call applications before the specified date as declared in the notice for empanelment from eligible auditors and auditing firms by a public notice to be displayed on the official website of the State Government and in any other mode, if required. Such notice shall also be published on the notice board of the office of the Registrar and District Deputy Registrars.(ii)Every applicant shall submit only one application to the office of the concerned District Deputy Registrar of the District, where he ordinarily resides.Applications received shall be scrutinized by the Committee presided over by the District Deputy Registrar consisting of the District Special Auditor of the District, representative of the Chartered Accountants of the District, representative of the Certified Auditors of the District as members and the Assistant Registrar (Administration) of the District shall function as Member Secretary of the said committee.(iv)After scrutiny, the District Deputy Registrar shall submit list of eligible applicants to the Registrar alongwith their applications and documents. The Registrar may scrutinize the applications recommended by the District Committee.(v)Any aggrieved applicant may approach to the Grievance Redressal Committee headed by the Divisional Joint Registrar, Divisional Joint Registrar (Audit), as member and Divisional Deputy Registrar of the Division shall function as Member Secretary of the said Committee and the decision of the Committee shall be final.(vi)The Registrar shall cause to display a approved list of auditors and auditing firms panel on the official website of the Government.(vii)the Registrar shall classify the societies and auditors for the purpose of audit in the following manner, namely :-Classification of Auditors and Societies[under section 81 and Rule 69 (1) (f) (vii)]TABLE - A
Class Discriptions of Auditors Societies to be Audited
(1) (2) (3)
A Chartered Accountant Firm CharteredAccountant having at least 5 years experience in audit ofco-operative Societies. (1) Maharahstra State Co-operative Bank *
  Joint Registrar (Audit) and Special AuditorClass-I who was completed probation period successfully. (2) District Central Co-operative Bank
    (3) Urban Co-operative Banks having Depositsmore than Rs. 25 Crores.
    (4) Salary Earners Co-op. Banks
    (5) Maharashtra State Co-operative MarketingFederation *
    (6) Maharashtra State Co-operative CottonGrover's Federation.*
    (7) Maharashtra Rajya Dudh Sangh (Mahananda) *
    (8) Maharashtra State Co-operative Agricultureand Rural Multipurpose Development Bank
    (9) Maharashtra State Co-operative HousingFinance Corporation.
    (10) Maharashtra State Tribal DevelopmentCorporation
    (11) Maharashtra Rajya Sahakari Sangh andDivisional Co-operative Board.
    (12) Maharashtra State Co-operative FisheriesFederation
    (13) Maharashtra State Co-operative ConsumerFederation
    (14) Maharashtra State Co-operative SpinningMill Federation.
    (15 Maharashtra State Co-operative Power loomFederation
    (16) Maharashtra State Co-operative TextileFederation
    (17) Maharashtra State Co-operative HandloomFederation
    (18) Maharashtra State Co-operative CottonGrovers Processing Societies.
    (19) Maharashtra State Co-operative LabourSocieties Federation.
    (20) Maharashtra State Co-operative BankAssociation
    (21) Maharashtra State Co-operative CreditSocieties Federation.
    (22) Maharashtra State Co-operative JungalKamgar Federation.
    (23) Maharashtra State Co-operative SugarFactories Federation.
    (24) Maharashtra State Co-operative SugarIndustries Development Societies.
    (25) Maharashtra State Co-op. Cadre Federationand District Coop Cadre Board.
    (26) Maharashtra State Co-op. IndustrialSocieties Federation.
    (27) Other National and State level Co-op.Federation not mentioning above.
    (28) Co-operative Spinning Mill/ Weaving Mills
    (29) Co-operative Sugar Factories
    (30) District Co-operative Milk Union
    (31) District Co-operative Agriculture andRural Multipurpose Development Bank.
    (32) Any other society specified by Registrarfrom time to time.
*Note : Societies at Sr. Nos. 1, 5, 6 and 7 shall be audited only by Chartered Accountant Firm or a Chartered Accountant or Joint Registrar (Audit) categorized in 'A' Class. Auditors categorized in `B' Class and 'C' Class are not eligible to audit societies categorized under Table - A. In case of Co-operative Bank, the Government Auditor may conduct re-audit, test-audit or special audit only.TABLE - B
Class Descriptions of Auditors Societies to be Audited
(1) (2) (3)
B Chartered Accountant having at least one yearexperience in audit of Co-operative Societies. (1)Urban Co-operative Bank having deposits upto Rs. 25 Crores.
  SpecialAuditor Class - 2, Auditor Grade - I who was completed probation period successfully. (2) Urban Co-operative Credit Society and Ruralnonagricultural credit society having deposit 10 crores andabove.
  CertifiedAuditor having at least 10 years experience in audit of Co-operative Societies (3) Salary earners Co-operative Credit Societyhaving working capital 10 crores and above.
    (4) Co-operative Starch Factories
    (5) Co-operative Industrial estates.
    (6) District Co-operative Labour Federation
    (7) Sales and Purchase Co-operative Unions(District and Taluka).
    (8) Housing societies having 100 and moremembers
    (9) Co-operative Jinning and Pressing Societies/Rice Mills and Oil Mills.
    (10) Primary Co-operative Dairy Societieshaving turnover above Rs. 50 lacs.
    (11) Primary Co-operative Poultry and piggeryand livestock Societies having turnover above Rs. 25 lacs.
    (12) Primary Co-operative Fisheries Societieshaving turnover above Rs. 50 lacs.
    (13) District / Central Weavers Co-op.Societies.
    (14) District and Central Co-op. Consumersstores
    (15) Co-operative Hospital
    (16) Mula Pravara Electric Society and OtherElec. Societies.
    (17) District Co-operative Board
    (18) District Housing Federation
    (19) Other District Federal Societies notmentioned above
    (20) Any other society specified by Registrarfrom time to time. Special Auditor
* Note : Societies at Sr. Nos. 1 and 2 shall be audited only by a Chartered Accountant and Special Auditor Class- II Categorized in 'B' Class. Auditors categorized in 'A' Class above are also eligible to audit societies categorized under Table - B. Auditors categorized in 'C' Class are not eligible to audit societies categorized under Table - B.TABLE - C
Class Descriptions of Auditors Societies to be Audited
(1) (2) (3)
C Certified Auditor having at least 3 yearsexperience in audit of Co-operative Societies. (1) Primary Agricultural and Co-operativeCredit Societies (PACs) and Primary Krushak and Adiwasi Seva /Grain Bank.
  Auditor Grade - 2 and Sub - Auditor who wascompleted probation period successfully. (2) Urban Co-operative Credit Societies andRural nonagricultural credit societies having deposits less thanRs. 10 crores.
    (3) Salary earners societies having workingcapital less than Rs.10 crores.
    (4) Primary Co-operative Dairy Societies havingturnover less than Rs. 50 lacs.
    (5) Primary Co-operative Poultry, Piggery andLivestock Societies having turn over less than Rs. 25 lacs.
    (6) Primary Co-operative Fisheries Societieshaving turnover less than Rs. 50 lacs.
    (7) Sugarcane supply cooperative societies /Transport Coop. societies.
    (8) All Farming Co-operative Societies
    (9) Housing societies having less than 100members
    (10) Lift irrigation societies
    (11) Labour contract societies
    (12) Forest Labour Co-operative Societies
    (13) All types of Primary Marketing Societiesand Food Processing Societies.
    (14) Primary Weavers Co-op. Societies (Handloomand Power loom).
    (15) Primary Industrial Co-op. Societies.
    (16) BLVA societies
    (17) Primary consumers Co-operative Societies.
    (18) Social service societies and unemployedyouth co-operative Societies.
    (19) Taluka supervisory unions.
    (20) Any other society specified by Registrarfrom time to time.
* Note : Auditors categorized in 'A' Class and `B' Class above are also eligible to audit societies categorized under Table - 'C'.(g)The criteria for removal of the name of auditor and auditing firms from the panel shall be as follows, namely :-(i)non-submission of audit report as specified in sub-section (5B) of section 81, to the society and the Registrar within the period of one month from the date of completion and in any case before the issuance of notice of the general body meeting ;(ii)not-disclosure the true and correct picture of accounts as specified in clause (c) of sub-section (3) of section 81 ;(iii)after giving consent for audit by the auditor or auditing firm and after issuance of order of appointment of auditor or auditing firm, audit is not completed within stipulated period as specified in sub-section (1) of section 81 ;(iv)non-submission of specific report stating that, any person is guilty of any offence relating to the accounts or any other offences within a period of fifteen days from the date of submission of audit report to the society and the Registrar ;(v)failure to file special report to the Registrar if any ;(vi)failure to file the First Information Report, if required thereof;(vii)non-submission of scrutiny of audit rectification report within six months to the society ;(viii)if in the test audit or re-audit of the society it is found that, the auditor or auditing firm is responsible for any commissions and omissions ;(ix)if the auditor is borrower of the society and has conducted the audit of the same society without disclosing the said fact to the society ;(x)if the auditor or his family member is employee or ex-employee of the concerned Co-operative society ;(xi)if the auditor is an auditor or a partner of an auditing firm which is also conducting internal or concurrent audit of concerned Co-operative society ;(xii)if the auditor or his family member, as specified under explanation (I) of sub-section (2) of section 75 of the Act, is committee member of the concerned co-operative society ;(xiii)if the auditor has conducted audit, without appointment order issued by the society with the prior approval of general body or the Registrar, if any, as the case may be ;(xiv)if the auditor is family member of a employee of the department of co-operation:]
(2)[ ***] [Deleted by Notification No. CSL-2014/697/C.R.04/13C, dated 30.8.2014 (w.e.f. 23.12.1961).]
(3)[ The auditor shall submit in respect of Co-operative Banks in Form N-1 and in other cases in Form N-2 an audit memorandum to the society and to the Registrar with regards to the accounts, balance sheet and profit and loss accounts or statement of income and expenditure examined by him 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, accounting policies adopted by the society as per accounting standards laid down by the State Government or the Institute of Chartered Accountants of India as the case may be, the said accounts give all the information required by the Act in the manner so required and give true and fair view,-
(i)in the case of the balance sheet, the state of society's affairs as at the end of the financial year or any other subsequent date up to which the accounts are made up and examined by him, and
(ii)in the case of the profit and loss account of the profit or loss for the financial year or the period covered by the audit, as the case may be. While certifying the profit or loss of the society, Auditor shall quantify the effect of shortfall in various provisions, like Non Performing Assets, overdue interest, depreciation and any other provisions relating to expenses over profit or loss and state clearly that, after considering effect of all provisions, whether there is profit or loss to the society.]
(4)The audit memorandum shall state;-
(i)whether the auditor had obtained all the information and explanations which to the best of his knowledge and belief were necessary for the purpose of his audit;
(ii)whether in his opinion proper books of accounts, as required by the Act, these rules and the bye-laws of the society have been kept by the society so far as it appears from the examination of these books; and
(iii)whether the balance sheet and profit and loss account examined by him are in agreement with the books of accounts and returns of the society [and give true and fair view of state of affairs.] [Inserted by Notification No. CSL-2014/697/C.R.04/13C, dated 30.8.2014 (w.e.f. 23.12.1961).]
(iv)[ whether the accounting standards adopted by the society are consistent with, those laid down by the State Government or the Institute of Chartered Accountants of India, as the case may be, and has no adverse effect on the accounts and financial status of the society.] [Inserted by Notification No. CSL-2014/697/C.R.04/13C, dated 30.8.2014 (w.e.f. 23.12.1961).]
(5)Where any of the matters referred to in sub-rule (4) are answered in the negative or with a qualification, the audit memorandum shall specify the reasons for the answer.
(6)The audit memorandum shall also contain schedules with full particulars of;-
(i)all transactions which appear to be contrary to the provisions of the Act, the rules or the bye-laws of the society;
(ii)all sums which ought to have been but have not been brought into account by the society;
(iii)any material impropriety or irregularity in the expenditure or in the realisation of moneys due to the society;
(iv)any money or property belonging to the society which appear to the auditor to be bad or doubtful debt; and
(v)any other matters specified by the Registrar in this behalf.
(7)The summary of audit memorandum as prepared by auditor shall be read out in a general meeting. The audit memorandum together with its accompaniments shall be open to inspection by any member of the society. The Registrar may however direct that any portion of the audit memorandum which appears to him to be of objectionable nature or not justified by facts shall be expunged and the portion so expunged shall not form part of the audit memorandum.
(8)The Registrar may from time to time specify the form or forms in which the statements of accounts and information shall be prepared for audit by the society.
(9)On completion of his statutory audit, the auditor shall award an audit classification letter to the society whose accounts he has audited in accordance with the instructions issued by the Registrar from time to time. The list of societies to be published under sub-section (3) of Section 12 shall also specify the audit class of the society.