Ample Opportunity for CAs in co-op Sector
1) Statutory Audit of Co-op. Socy. Consequent upon amendment in
constitution of India, Co-Op. Societies Act is amended in 2013.
Society, in its AGM, will appoint auditor from panel approved by
a) Rule 29B - CA & CA Firm having experience of minimum 10 years
can audit societies having W.C. or turnover more than Rs. 25
b) CA/ CA firm having Min. exp. of 5 years can audit. Group B
societies having turnover or W/C more than Rs. 10 Crores and
W/C or turnover below Rs. 25 Crore.
c) CA/CA firm having min. 3 years experience/ departmental
auditors can audit.
Group C societies having less than Rs.10 Crores W/C / turnover.
2)Tax Audit u/s 44AB
Co-op. Socy. having turnover exceeding Rs. 1
Crore, is required to get tax audit u/s 44AB of IT
Act to be done by Chartered Accountant.
Previously, this limit was Rs. 40 Lakh.
3)Investment Audit of Ucb/dccb/scb
Ucbs are required to invest their entire SLR in
Govt. Securities.
Investments are clasified in three categories
i) Held till maturity
ii) Available for sale
iii) Held for trading
Investment in held till maturity is valuated at
cost. Premium on purchase is amortized till
the date maturity.
Investment in remaining two categories are
marked to market and any depreciation is
recognized while appreciation is ignored.
Auditor should scrutinize that Sale and
Purchase transactions are done at rates
beneficial to bank.
Investment shown by bank tallies with the
amount as shows by SGL/ CSGL Certificate.
4) Concurrent Audit of Ucbs
 As per RBI guidelines, concurrent audit to all UCbs is now
 It is carried out quarterly basis
 As per Ghosh Committee Report, RBI introduced
concurrent audit for all Scheduled banks and Ucbs having
deposit over Rs.50 Crores.
But based on the
recommendations of JPC which enquired in to stock
market scam, all Ucbs are required to introduce system of
concurrent audit.
 Concurrent audit system is to be regarded as part of bank’s
early warning system to ensure timely detection of
irregularities and lapses.
 CAs carring out internal/ concurrent audit shall not take
assignment as statutory audit.
Internal Audit of big Co-operative
Big Co-op. like Sugar factory, spinning mill and agro
and industrial processing socy. get the internal audit
conducted by CA.
It helps in timely corrections of errors and lapses etc.
6) Audit of electronic and data processing system
(System Audit).
CA having CISA / DISA qualification can carry out
system audit of banks.
7) VAT Audit
Co-op. Socy. having turnover exceeding prescribed
limit, is required to carry out VAT Audit by CA/CA firm
8) Audit Committee As per RBI Guidelines
• To ensure and enhance the effectiveness of internal
audit/ inspection as management tool.
• Audit committee should be set up at board level
consisting chairman and 3 or 4 director.
• One or more of such directors should be CA or person
experience in finance, accountancy and audit system.
9) Co-opted directors on BOD (Sec. 28A(4A)
• Board may co-op. two persons having experience in
field of management, banking, finance or specialization
in any other field relating to objects of socy.
• Generally, CAs are co-opted as expert director on
10) Financial Consultancy
• In big Co-operative like Sugar, Milk Federation, in
financial decision making for erecting new plant
co-generation, distillery, cattle feed factory,
chilling unit, paper plant, only CA can give good
type of advice to co-operative.
• CA can effectively prepare cash flow, fund flow
statements. He can calculate various financial
ratios like current ratio, debt equity ratio, interest
coverage ratio, ROI etc. and can advise cooperative in effective way.
• CA can work out Break even analysis (BEP)
• He can suggest whether it is profitable to buy or
let by making financial analysis.
11) Appearance before Income Tax authority.
• CA can consult his clients in Income Tax
matters and appears before I.T. Authorities on
behalf of clients.
12) Deciding the amount payable by borrower
under OTS - case referred to CA either by bank
or by borrower.
Session - II
• Co-operative Governance means how co-op. socy. is
managed and controlled.
• The best way of managing and functioning of socy.
• Co-op. Governance means observance of Act & Rule &
bilaws in Managing the socy.
• Co-op. governance is the way the society is organized
and managed to ensure that financial stake holders
(share holders, creditors & bankers) receive their fair
share of society’s earning and assets.
• Co-operative governance is concerned with the ways
the co-op. society’s are governed.
• There are verious participants in co-op society.
a) Share Holders, b) Creditors, c) Bankers
d) BOD, E) Employees, f) Customers.
• Keeping view interests of verious stake
holders, co-op. governance is concerned with
effective management of relationship
between verious stake holders.
• Co-op. governance is acceptance by
management of rights of share holders as true
owners of co-op. society and their own role as
trustee on behalf of share holders.
• Co-op. governance is
i) Application of best management practices.
ii) Compliance with law in true letter and spirit.
iii) Adherance to ethical standards for effective
iv) Distribution of wealth and discharge of social
responsibility for sustainable growth of stake holders.
Final Authority in Co-op.Socy. (Sec. 26)
• Final authority of Socy. shall vests in members.
Annual General Meeting (Sec. 27)
• Every Socy. shall convey AGM once in year before 25th
Sept. Board may call this meeting (Rule 14 AJ).
AGM will consider following
• Annual report presented by Board.
• Latest available audit report and report of Board thereon.
• Consideration of enquiry report.
• Disposal of net profits.
• Approval of annual budget.
• Amendment of bilaws.
• Perusal of list of employees who are relatives of BOD etc.
appointment of auditors.
Sec - 27 A - Participation of members in the management
(w.e.f. 11/02/2013)
• He must attend 3 out of 5 AGM
• Utilise minimum services as specified in bilaws.
• If member fails to utilise minimum service or fails to
attend meeting as above, he will lose his right to vote
for period of three years.
• Sec. 27 B - Returns to be filed with Registrar
• Board of every co-op. socy. shall file following returns
within 6 months of close of FY.
• Annual return of activities.
• Audited statement of account.
• Plan for disposal of surplus.
• List of amendments to byelaws.
• Declaration regarding holding AGM and conduct of
election when due.
• Misappropriation or embezzlement of funds and
action taken against persons responsible.
28 A (1) Management of co-op. socy. west in Board.
28 A (2) Number o BORD minimum 9, Maximum 21
1 Seat for SC & ST
2 seats for women
Sec. 28A (4A) 2 co-opted directors having experience in
banking, finance, management. This is in addition to
max. number of BOD.
3 Functional directors.
Functional and expert directors shalln't form part of
Sec. 29A (4B) - State Govt. may nominate one director
on BOD of Socy. other than PAC.
Sec. 28B - Board to arrange for election.
• Sec.28C Powers and Functions of BOD
– to admit members.
– to dispose of application for allotment of shares.
– to mobilize resorces and invest funds.
– sanction of loans to members.
– to acquire/ dispose of movabe and immovable
property required for achieving objectives of socy.
– to set up specific goals to be achieved towards
organisational objectives.
– to approve expenditure necessary for business
and etc.
• 29C - Disqualification of BOD.
• If he is in default to that socy. or any other co-op. socy. as
• Interested directly or indirectly in contract made with socy.
or in sale or purchase made by socy.
• Carries on business carried on by socy.
• Employed as legal practitioner on behalf of such socy. or
accepts employment as legal practitioner against such socy.
• If he is paid employee (other than CEO) of such socy. or of
its financing bank.
• He is a near relation of paid employee of such socy.
• He is disqualified to be member of the socy. or to vote as
such member.
• He was member of Board which failed to make
arrangement for election within time limit specified in Sec.
• He is a representative of co-op. socy. which is in default
to financing bank.
• He absents three consecutive meetings of Board
without leave of absence.
Sec. 29 (c) (3) If Board of Co-op. Socy. fails.
– To assist CEC for conducting election or
– To call AGM u/s 27 or special G. Meeting u/s 28 or
– To present the audited accounts and annual report to
– Every member of Board shall be disqualified for being
elected or appointed or continued as member of Board for
period of 5 years from date of order of disqualification.
– Rule 14 AK - Board may meet as and when required to
transact the business.
– But interval between two consecutive meeting shalln't
exceed 3 months.
Sec. 30 - Supersession or Suspension of Board
– No board of co-op. socy. shall be superseded or kept under
suspension for period exceeding 6 months.
– In case of bank, this period is one year.
Grounds for superstation / suspension (Sec. 30 (2)
If in the opinion of Registrar, board
– Persistently makes default or is negligent in performance of the
duties imosed on it by Act, Rules or byelaws or
– Commits any act, which is prejudicial to the interest of socy. /
– When there is stalement in constitution or functioning of board.
– Has serious financial irregularities or Frauds which have been
– Fails to provide books and record, information and assistance to
election commission.
– He supersedes or keep under suspension the board of Directors
• BOD shall not be superseded or kept under suspension
if there is no Govt. shareholding or loan or any
financial assistance or any guarantee by the Govt.
• In case of bank, bod shall be superseded / kept under
suspension only after consultation with RBI/ Nabard.
• 39A (15) Board of every co-op. socy. shall inform the EC
about expiry of its term of office at least six months
before date of expiry of their term.
• Sec. 30 B - Power of State Govt. to give directions in
public interest.
• For safeguarding interest of members, or in public
interest and for securing proper implementation of coop. and other development programs, S. Govt. may
issue directions to the socy.
Sec. 57 Disposal of Net profit
25% to Reserve Fund.
2% to Co-operative Education fund.
Unless it contributes to co-op. Edu. Fund, it
cannot pay dividend to its members.
• Sec. 57A - Co-op. Edu. Fund shall
• Be Utilised for the purpose of promotion of
co-op. movement in the state and for
providing education to the members, directors
and training to employees of co-op. society.
Investment of fund (Sec. 58)
• Co-op. socy. may invest its funds.
– In Govt. saving bank.
– Trustee Securities.
– Shares/ securities of any other societies.
– With any co-op. bank.
– Any sch. bank or FI regulated by RBI and approved
by General body of socy.
• Restriction on Borrowings (Sec. 59)
• Co-op. Socy. shall receive deposit and loans
only to such extent as may be specified in
• Admission of members before General
Meeting of Socy.(Rule 8)
– Co-op socy. shall not admit members within 30
days prior to date of AGM.
• Rule 9 - CEC may Formulate guidelines for
preparation of electoral rolls and for conducts
of elections of all co-operatives in state.
• Rule 14 - AF CEO shall report casual vacancy in
BOD to CEC within 7 days of its occurance.
• Rule 26 Soc. shall not enter into transaction
with non members unless byelaws permit or
previous sanction of Registrar has been
obtained by socy.
Co-operative play Pioneer role in rural
For the above purpose, co-op. get huge funds
from Central Govt., State Govt. NCDC, NDDB,
These funds are in the form of Govt. Capital,
loan, subsidy and guarantees.
In order to avail the above facilities, co-op. has
to submit proposals to various authorities.
• Drafting various proposals for loan, capital
subsidy and guarantee require special skill.
• Financial position of socy. is required to stated in
nutshell and within half page.
• Necessary schedules referring items in B/S to be
• Fund flow and cash flow statement are required
to be prepared.
• Amount of fixed and variable expenses to be
given separately.
• BEP is required to be given.
• It is to be shown how co-operative with repay the
loan and capital on due dates.
• For purpose of redemption of capital on due
date, capital redemption fund will be created
every year.
• This fund will be separately invested so that coop. can draw amount and pay Govt. capital on
due date.
• Proposal will also show whether infrastructure
facilities are available.
• Proposal will also give plan for marketing the
• All above, require excellent drafting skill which
C.A. posseses.