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HISTORY OF THE DEPARTMENT

Prior to 1981 the cooperative societies were audited by the audit wing headed by the Chief Audit Officer under the control of the Registrar of Cooperative Societies. With a view to ensure independent audit and also on the recommendations of the Santhanam Committee, Government had separated the audit function from the Cooperative Department i.e. Registrar of Cooperative Societies and entrusted the Cooperative Audit function (except Milk Cooperatives) to the newly formed Department of Cooperative Audit w.e.f 17-06-1981 as per G.O.Ms.No.677 Cooperation Department, dated 22.11.78. This Department is now headed by Director of Cooperative Audit under the Administrative control of Finance Department of Secretariat.

The Director of Co-operative Audit is the Registrar of Co-operative Audit appointed by the Government in exercise of the powers conferred by Section 3 of Tamil Nadu Cooperative Societies Act, 1983 to exercise the powers of Registrar under Section 80 of the Tamil Nadu Cooperative Societies Act read with Rules 101, 102 & 103 of Tamil Nadu Cooperative Societies Rules 1988 and the Government also conferred the powers under section 72,80 & 148 of Tamil Nadu Cooperative Societies Act, 1983 to the Director of Cooperative Audit. As per the above said Statutory provision the Director of Co-operative Audit is responsible for conducting audit of all the Cooperative institutions in Tamil Nadu, except milk Co-operative societies. (For Audit of milk Co-operative societies there is a separate Director of Milk Co-operative Audit).

The Audit of Cooperative societies are being conducted by the Auditors of Cooperative Audit Department as per Section 80 of Tamil Nadu Cooperative Societies Act, 1983 read with Rule 101, 102 and 103 of Tamil Nadu Cooperative Societies Act, 1988. They are as follows:

AUDIT: Under Section 80 of T.N.C.S.Act 1983

80. Audit :-

(1) (a) The Registrar shall audit or cause to be audited by a person authorised by him by general or special order in wiriting in this behalf, the accounts of every registered society once at least in every co-operative year. The Registrar shall communicate the result of the audit to the registered society concerned.

(b) where such audit is caused to be made once in every co-operative year -

(i) the registered society shall prepare the financial statement and other details required for the completion of audit within three months from the close of its co-operative year or such further period or periods as the Registrar may permit provided that such extended period or periods shall not exceed six months in the aggregate, and

(ii) the audit shall be completed within a period of six months from the close of the co-operative year of the registered society concerned or such further period or periods as the Registrar may permit for reasons to be recorded in writing provided that such extended period or periods shall not exceed six months in the aggregate.

(1) [Explanation .- In computing the period referred to in this clause, sub-section (4) of section 81, sub-section (4) of section 82, the second proviso to sub-section (1) of section 87 or the first provisio to clause (e) of sub-section (1) of section 88, any period or periods during which any proceeding under the respective provision was held up on account of any stay or injunction by the order of any court shall be excluded.]

(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of the cash balance and securities and a valuation of the assets and liabilities of the society.

(3) The Registrar or the person authorised by him under sub-section (1) shall, at all reasonable times, have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may summon any person in possession of or responsible for, the custody of any such books, accounts, documents, securities, cash or other properties to produce the same at any place at the headquarters of the society or any branch thereof.

(4) Every person who is or has at any time been an officer or employee of the society and every member and past member of the society shall furnish such information in regard to the transaction and working of the society as the Registrar or the person authorised by him may require.

(5) The Registrar may, by order in writing, direct any officer of the society to take such action as may be specified in the order to remedy within such time as may be specified therein the defects, if any, disclosed as a result of the audit.

(6) Every registered society shall pay to the Government such fee for the audit of its accounts for each co-operative year as may be fixed by the Registrar in accordance with the rules made in this behalf and the fee levied for audit shall be recoverable in the manner specified in section 148:

Provided that the Government may, by general or special order, exempt any registered society or class of registred societies from the payment of the whole or any part of the fee payable for audit for any co-operative year.

(7) If the result of the audit discloses any defect, the registered society shall, within three months from the date of communication of the result of the audit, take steps to remedy the defects disclosed as a result of the audit, and report to the Registrar of the action taken by it thereon.

(8) If it appears to the Registrar, on an application by a registred society or otherwise, that it is necessary or expedient to re-audit any account of that society, the Registrar may by order provide for such re-audit and the provisions of this Act applicable to audit of accounts of that society shall apply to such re-audit.

In exercise of the powers conferred by Sec.3 of TNCS Act 1983, all the powers of the Registrar under Section 80 have been conferred on the Director of Cooperative Audit vide G.O Ms. No 47 F(TH & CA) Department, dated 11.01.1990.

Preparation of Final Audit Memorandum (under Rule 101 of TNCS Rules, 1988)

Rule 101: Preparation of financial statement and other details required for audit:-

(1) The Chief Executive of the society or where there is no Chief Executive, the President of the society shall prepare the financial statements and other details required for the completion of audit immediately after the close of the co-operative year of the society concerned and shall intimate in Form No.34 to the auditor, the Registrar (Audit), the Registrar and the federal society concerned.

Explanation. - For the purposes of this rule and rules 102 and 103, the expression "Registrar (Audit)" means the officer of the Government on whom the powers of a Registrar under section 80 have been conferred.

(2) Where the financial statements and other details required for the completion of audit are not or could not be prepared within the period of three months, the Chief Executive or the President, as the case may be, shall make an application in Form No.35 to the Registrar requesting extension of time.

(3) On receipt of an application in Form No.35, the Registrar shall examine and grant subject to the provisions of section 80 (1) (b)(i), extension of time as may be considered necessary by him and such permission shall be communicated in Form No.36 to the society, the federal society and the Registrar (Audit).

Rule 102:- Procedure for conducting audit:-

(1) The audit under section 80 shall in all cases extend back to the last date of the previous audit and shall be carried upto the last date of the co-operative year immediately preceding the audit.

(2) The Registrar (Audit) shall, where the audit is done by a person authorised by him under sub-section (1) of section 80, obtain from such person an audit memorandum on the accounts and on every balance sheet and profit and loss account examined by him, and in the audit memorandum, the person who does the audit shall state whether in his opinion and to the best of his information and according to the explanation given to him, the said accounts give a true and fair picture-

(i) in the case of the balance sheet, of the state of the society’s affairs as at the end of the co-operative year; and

(ii) in the case of the profit and loss account, of the profit and loss for the co-operative year.

(3) The person who does the audit shall also state in the audit memorandum-

(a) whether he has obtained all the information and explanations which to the best of his knowledge and belief, were necessary for the purpose of his audit;

(b) whether, in his opinion, proper accounts and books as required by the Act, these rules and the by-laws of the society have been kept and regularly maintained by the society so far as it appears from his examination of these books; and

(c) whether the society’s balance sheet and profit and loss account dealt with by the memorandum are in agreement with the accounts, books and returns.

(4) Where any of the matters referred to in sub-rule (3) is answered in negative or with a qualification, the person who does the audit shall specify the reasons for the answer in the audit memorandum.

(5) The audit memorandum shall contain schedules with full particulars of -

(i) all transactions which appear to be contrary to the provisions of the Act, these rules or the by-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 appears to the persons who does the audit to be bad or doubtful debts; and

(v) any other information as may be required by the Registrar (Audit) in this behalf.

(6) (a) Where the audit is not or could not be completed within the period of six months from the close of the co-operative year of the society concerned, the auditor shall make an application to the Registrar (Audit) requesting extension of time detailing the action taken to complete the audit within the said period of six months, the reasons for non-completion within that time, the further steps taken or proposed to be taken to complete the audit and the period within which the audit will be completed. an application for further extension of the time shall state also the reasons for non-completion within the extension of time granted earlier. The application shall be sent in time and at any rate to reach the Registrar (Audit) not later than a week after the expiry of the said period of six months or as the case may be, the period already extended.

(b) On receipt of the application from the auditor for extension of time, the Registrar (Audit) shall examine and grant extension of time as considered necessary by him and such permission shall be communicated to the auditor, to the society and to the federal society concerned and to the officer in-charge of administration of the society concerned:

Provided that such extension or extensions of time granted shall not exceed six months in the aggregate in accordance with sub-clause (ii) of clause (b) of sub-section (1) of section 80.

(7) On completion of the audit, the Registrar (Audit) or the person authorised under sub-section (1) of section 80 shall award an audit classification letter to the society whose accounts have been audited, in accordance with the instructions of the Registrar (Audit) issued from time to time.

(8) After every audit, the Registrar (Audit) shall communicate the result of audit and grant an audit certificate and a copy of the audit memorandum specified in sub-rule (2) duly signed by him to the society concerned under copy to the federal society concerned and the officer in charge of administration of the society. While communicating the audit memorandum, the Registrar (Audit) may modify or expunge any portion thereof which appears to him to be objectionable or not justified by facts.

(9) The society shall publish-

(i) the audit certificate;

(ii) the profit and loss account; and

(iii) the balance sheet

in the manner specified by the Registrar (Audit) and shall also keep them open for inspection by any member of the society. The summary of the audit memorandum shall also be read out at the general meeting of the society.

Rule 103:- Levy of audit fees

(1) The Registrar (Audit), shall specify the fees payable by the different classes of societies for the audit of their accounts for each co-operative year under sub-section (6) of section 80 as provided below:-

(a) Where the Registrar (Audit) appoints one or more persons specially or exclusively for the audit of the accounts of one or more societies, the fee payable by such society or societies shall be the entire or the proportionate cost of the staff as may be fixed by the Registrar.

(b) In respect of other societies for the audit of whose accounts the regular staff is employed, the Registrar (Audit) shall fix the scale of fees with the previous approval of the Government after taking into account the total cost of regular staff employed for this purpose.

(2) Every society which is subject to the levy of audit fees shall remit the audit fees payable under sub-rule (1) into the nearest Government treasury within three months from the date of issue of demand by the Registrar (Audit) in this behalf.

(1)(a) The Registrar shall audit or cause to be audited by a person authorised by his by general or special order in writing in this behalf, the accounts of every registered society once at least in every cooperative year. The Registrar shall communicate the result of the audit to the registered society concerned.

(b) where such audit is caused to be made once in every co-operative year -

(i) the registered society shall prepare the financial statements and other details required for the completion of audit within three months from the close of its cooperative year or such further period or periods as the Registrar may permit provided that such extended period or periods shall not exceed six months in the aggregate, and

(ii) the audit shall be completed within a period of six months from the close of the cooperative year of the registered society concerned or such further period or periods as the Registrar may permit for reasons to be recorded in writing provided that such extended period or periods shall not exceed six months in the aggregate.

[Explanation - In computing the period referred to in this clause, sub-section (4) of section 81, sub-section (4) of section 82, the second proviso to sub-section(1) of section 87 or the first proviso to clause (e) of sub-section 91) of section 88, any period or periods during which many proceeding under the respective provision was held up on account of any stay or injunction by the order of any court shall be excluded].

(2) The audit under sub-section (1) shall include an examination of overdue debts, if any, the verification of the cash balance and securities and a valuation of the assets and liabilities of the society.