AUDIT, INQUIRY, INSPECTION AND SUPERVISION
69.
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Procedure for appointment of auditors and for
conducting audit:-
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(1)
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The audit of accounts of societies shall be conducted by
Departmental Auditors or by certified auditors appointed by the Registrar
from time to time on such terms and conditions as he deems fit :
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Provided
that any society or class of societies notified by the Registrar may get
their accounts audited by an auditor selected from the panel of certified
auditors maintained by the Registrar and published by him in the Official
Gazette.
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Explanation 1: — For the purposes of this Chapter,
audit shall include annual or
periodical audit, continuous or concurrent audit and test or super audit and
reaudit.
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Explanation
2: — For purposes of this rule, "a
certified auditor" includes —
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(a)
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a Chartered
Accountant within the meaning of the Chartered Accountants Act, 1949;
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(b)
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a person who holds a Government Diploma in co-operative accounts or a
Government Diploma in co-operation and accountancy; or
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(c)
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a person who has served as an auditor in the Co-operative Department
of the State Government, and whose name has been included by the Registrar in
the panel of certified auditors maintained and published by him in the
Official Gazette at least once every three years.
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(2)
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The audit under Section 84 shall in all cases extend back to the last
date of the previous audit and shall be carried out up to the last date of
the co-operative year immediately preceding the audit or where the Registrar
so directs in the case of any particular society or class of societies, such
other date as may be specified by the Registrar.
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(3)
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The auditor shall
submit an audit
memorandum to the
society and to
the Registrar in the form specified
by the Registrar, on the accounts examined by him and on the balance sheet
and profit and loss account 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, the
said accounts give all the information required by the Act in the manner so
required and give true and fair view;—
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(i)
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in the case
of the balance sheet, of 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
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(ii)
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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.
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(4)
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The audit memorandum shall
state;-
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(i)
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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;
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(ii)
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whether in
his opinion proper books of accounts, as required by the Act, these rules and
the by-laws of the society have been kept by the society so far as it appears
from the examination of these books; and
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(iii)
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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.
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(5)
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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.
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(6)
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The audit
memorandum shall also contain schedules with full particulars of;—
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(i)
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all
transactions which appear to be contrary to the provisions of the Act, the
rules or the by-laws of the society;
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(ii)
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all sums
which ought to have been but have not been brought into account by the
society;
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(iii)
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any material
impropriety or irregularity in the expenditure or in the realization of
moneys due to the society;
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(iv)
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any money or property belonging to the society which appear to the
auditor to be bad or doubtful debt; and
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(v)
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any other matters specified by the Registrar in this behalf.
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(7)
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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.
Maybe the Registrar however direct that any portion of the audit memorandum
which appears to him to be of objectionable nature or not justified by facts
ought to be expunged and the portion so expunged shall not form part of the
audit memorandum.
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(8)
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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.
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(9)
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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.
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70.
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Requisition of the federal society for inquiry:-
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Any federal society duly authorised
by a resolution of its committee, may submit a requisition to the Registrar
to hold an inquiry under Section 83 in respect of any society affiliated to
it, duly setting out the grounds on which the inquiry is sought. A copy of
such requisition shall be supplied to the society in respect of which the
requisition is made.
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71.
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Procedure and principles for the conduct of inquiry and inspection:-
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(1)
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An order authorising inquiry under Section 83 or inspection under
Section 84 shall, among other things, contain the following;-
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(a)
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the name of the person authorised to conduct the inquiry or inspection;
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(b)
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the name of the society whose affairs are to be inquired into or whose
books are to be inspected;
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(c)
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the specific point or points on which the inquiry or inspection is to
be made, the period within which the inquiry, or inspection is to be
completed and report submitted to the Registrar;
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(d)
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cost of inquiry;
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(e)
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any other matter relating to the inquiry or inspection.
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(2)
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A copy of every order authorising inquiry under Section 83 or
inspection under Section 84 shall be supplied to the federal society or
societies to which the society in respect of which the order is issued is
affiliated.
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(3)
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If the inquiry or inspection cannot be completed within the time
specified in the order referred to in sub-rule (1), the person conducting the
inquiry or inspection shall submit an interim report stating the reasons for
failure to complete the inquiry or inspection and the Registrar, if he is
satisfied, grant such extension of time for the completion of the inquiry or
inspection as he may deem necessary or he may withdraw the inquiry or
inspection from the officer to whom it is entrusted and hold the inquiry or
inspection himself or entrust it to such other person as he deems fit.
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(4)
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On receipt
of the order referred to in sub-rule (1), the person authorised to conduct
the inquiry or inspection shall proceed to examine the relevant books of
accounts and other documents in possession of the society or any of its
officers, members, agents or servants and obtain such information or
explanation from any such officers, members, agents or servants of the
society in regard to the transactions and working of the society as he deems
necessary for the conduct of such inquiry or inspection.
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(5)
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The person
authorised to conduct the inquiry or inspection shall submit his report to
the Registrar, on all the points mentioned in the order referred to in
sub-rule (1). The report shall contain his findings and the reasons therefore
supported by such documentary or other evidence as recorded by him during the
course of his inquiry or inspection. He shall also specify in his report the
costs of the inquiry or inspection together with reasons and recommend to the
Registrar the manner in which the entire cost or a part thereof may be
apportioned, amongst the parties specified in sub-section (1) of Section 85.
The Registrar shall pass such orders thereon as may be considered just after
giving a reasonable opportunity of being heard to the person or persons
concerned.
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(6)
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The costs of
the inquiry or inspection apportioned by the Registrar under sub-section (1)
of Section 85 shall be recovered as provided in Section 86. The Registrar may
direct that such costs or any part thereof shall be paid in the first
instance from the funds of the society or in case of inspection, from the
amount deposited by the creditor under clause (b) of sub-section (1) of
Section 84 and then recovered and repaid to the society or the creditor, as
the case may be.
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72.
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Procedure for assessing damages against delinquent promoters, etc.
under Section 88:-
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(1)
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On receipt of a report referred to in Section 88 or otherwise, the Registrar or any other person
authorised by him may make such further inquiries as he may deem necessary
regarding the extent to which the person who has taken any part in the
organisation or management of a society or any deceased, past or present
officer of the society has misapplied or retained, or become liable or
accountable for, any money or property of the society, or has committed
misfeasance or breach of trust in relation to the society.
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(2)
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On the
completion of the further inquiries under sub-rule (1), where necessary, the
Registrar or the person authorised by him shall issue a notice to the person
or persons concerned furnishing him or them with particulars of the acts of
misapplication, retention, misfeasance or breach of trust and the extent of
his or their liability involved therein and calling upon him or them to put
in statement in his or their defense within fifteen days of the date of issue
of the notice.
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(3)
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On receipt
of the statements referred to in sub-rule (2), the Registrar or the person
authorised by him, if he is satisfied that there are reasonable grounds for
holding the person or persons liable, shall frame charges.
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(4)
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The person
or persons concerned shall, after the charges are framed be asked to put in
his statement in defense and to indicate the documentary or oral evidence
which he would like to produce. The Registrar or the person authorised by him
may permit production of other documentary or oral evidence, if considered
necessary subsequently.
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(5)
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The
Registrar or the person authorised by him shall thereafter record the
evidence led by the society or the person or persons concerned and take on
record the documents proved by them and shall thereafter fix a date for
hearing arguments of both the parties.
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(6)
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On the day
fixed for hearing under sub-rule (5), the Registrar or the person authorised
by him, shall hear the arguments and may pass his final orders on the same
day or any date fixed by him within sixty days from the date on which the
hearing was completed. On the date so fixed, the Registrar or, as the case
may be, the person authorised by him shall make his final order either
ordering repayment of the money or return of the property to the society
together with interest at such rate as may be specified by him or to
contribute such amount to the assets of the society by way of compensation in
regard to misapplication, retention, misfeasance or breach of trust as may be
determined or may reject the claim submitted on behalf of the society.
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(7)
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The Registrar of the person authorised by him, may also provide in his
order for the payment of the cost of the proceeding under this rule or any
part of such cost as he thinks just.
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(8)
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The
Registrar or the person authorised by him shall furnish a copy of his order,
under sub-rule (6) to the party concerned within ten days of the date on
which he makes his final order.
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73.
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Form of
Rectification Report:-
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On receipt of an order, directing a society or its officers to rectify the defects and remedy the
irregularities, issued by the Registrar under Section 82 and on receipt of an
order issued by the Registrar under Section 87, the society shall, subject to
the provisions of sub-sections (2) and (3) of Section 87, submit to the
Registrar a rectification report in Form ‘O’. The society shall continue to
submit such rectification reports to the Registrar till all the defects are
rectified or the irregularities are remedied to the satisfaction of the
Registrar.
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74.
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Levy of audit charges and supervision charges:-
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(1)
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The Registrar may levy audit
charges and supervision charges payable annually on or before a specified
date by all or any class of societies including the societies in liquidation
at such rates as may be fixed by him with the approval of the State
Government. Such charges, if not paid by the specified date, shall be
recoverable under sub-section (2) of Section 155.
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(2)
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The State
Government may authorise the Registrar to grant total or partial exemption
from the payment of audit charges and/or supervision charges assessed to any
society or class of societies.
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