Page 276 - CA Inter Audit PARAM

CA Ravi Taori

Restrictions on borrowings - Section 30 of the Central Act further puts restriction on borrowings. According
to this section, a registered society shall accept loans and deposits from persons who are not members
subject to the restrictions and limits of the bye-laws of the society. The auditor will have to examine the
bye-laws in this respect.”

In the given situation, Mr. Dhairya, a member of the society, is holding 200 shares amounting to ₹ 2000
from the previous year. In view of the aforementioned restriction on shareholding by a member, Mr.
Dhairya is allowed to hold a maximum of 100 shares according to the Act.

Further, Aman Co-operative Society had accepted a loan from Mr. Shivam, a non-member. Since, there are
no restrictions regarding the acceptance of loan received from non-member in the society’s bye-laws, the
loan received from Mr. Shivam is permissible.

QNO— Type of Co-Operative Society New Course – (SM25)
AOC.01. Bhaskar CNO - Unique
50
A society has been formed by pan India employees of a public sector bank. The purpose of society is to
promote savings habits of members and to grant loan to them up to a small, specified amount. Small
savings are promoted amongst members by way of compulsory contribution from monthly salary. Identify
type of society and also discuss nature of books of accounts to be maintained by such a society.
Answer The society is in nature of Multi-state cooperative society as it serves interests of members in more than one
state. It accepts small savings from its members and grants loan to members. As per Multi-State Co-operative
Society Rules 2002, every Multi- State Co-operative society shall keep books of account with respect to: -
a. all sum of money received and expended and matters in respect of which the receipt and
expenditure take place
b. the assets and liabilities

QNO-- Special Report to Registrar New Course – (S24E)
AOC.01.70 Bhaskar CNO – AOC.060

You have been appointed as an auditor of Co-operative society. During the course of audit, you have
noticed some serious irregularities in the working of the society. Enumerate those special matters for
reporting to the Registrar
Answer Special report to the Registrar: During the course of audit, if the auditor notices that there are some serious
irregularities in the working of the society he may report these special matters to the Registrar, drawing
his specific attention to the points. The Registrar on receipt of such a special report may take necessary
action against the society. In the following cases, for instance, a special report may become necessary:

(i) Personal profiteering by members of managing committee in transactions of the society, which
are ultimately detrimental to the interest of the society.

(ii) Detection of fraud relating to expenses, purchases, property and stores of the society.

(iii) Specific examples of mis-management. Decisions of management against co-operative principles.

(iv) In the case of urban co-operative banks, disproportionate advances to vested interest groups, such
as relatives of management, and deliberate negligence about the recovery thereof. Cases of
reckless advancing, where the management is negligent about taking adequate security and
proper safeguards for judging the credit worthiness of the party.

QNO Sec-72 Qualification & Disqualification of Old Course-- (N18M/N18E/M21M)
AOC.05 Auditor(Multi-State Co-operative Society) -
Bhaskar CNO - AOC.100
Briefly explain the provisions for qualification and appointment of Auditors under the Multi-State Co-
operative Societies Act, 2002.
OR
Multi-State Co-operative Societies Act, 2002 states that a person who is a Chartered Accountant within
the meaning of the Chartered Accountants Act, 1949 can only be appointed as auditor of Multi-State co-
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