Committee for Co-operatives
and NPO Sectors
CA Vijay Kumar Garg
Chairman
Committee for Co-Operatives and NPO Sectors, ICAI
Vijay Kumar Garg
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OVERVIEW
Co-operative
and NPO Sector
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ABOUT THE COMMITTEE:
Non –standing committee of ICAI, came in force during the year 2011-12.
 The main focus/terms of reference of the committee are (Highlights) :
-Suggest
suitable REFORMS IN STATUS-Cooperative and NPO sector
- Promote UNIFORM ACCOUNTING
frameworkCooperative and NPO
-To promote state vise AUDITORS EMPANELMENT
and interaction with the concerned authority
-To promote GOOD GOVERNANCE, best practice and
prudent financial management in co-operative and NPO
sector
-To promote SOCAIL AUDIT concept
Cont…
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-AWARENESS program for all stakeholders
-To provide TECHNICAL and GOVERNANCE INPUT
training/workshops/publications
-AWARD/RECOGNITION for CSR- initiative by
NPO/Cooperatives/ Corporate
- SUPPORT to State/Central Government/Corporationin this sector
-Develop
necessary
technical
GUIDES
and
PUBLICATIONS
- Develop KNOWLEDGE PORTAL
- Help the government in MONITORING financial
discipline
-SUGGESTIONS/ Recommendations on issues relatedFCRA
-To conduct CERTIFICATION COURSES on
regulatory and accounting aspects
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TERMS OF REFERENCE (Detailed): 1
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To develop necessary technical guides and publications for the
benefit of Co-operative banks, Co-thrifts and credit societies
and other Co-operatives as a national movement.
To develop a knowledge portal providing information
regarding subsidies and other support received by the NPOs
from the State and the Central Government and to promote
various government initiatives to implement social welfare
schemes of the NPO Sector and facilitate sharing of
knowledge regarding Governance, legal compliance and best
practices in financial management.
To help the government in monitoring financial discipline in
the NPO sector by prescribing transparent guidelines and
procedures including documentation and evidence of actual
work done and to advise the government on limitations to be
imposed on administrative and other expenditures of the
NPOs specially those incurred out of government grants.
To suggest recommendation on issues related to the Foreign
Contributions Regulation Act, 2010, Rules , regulations and
guidelines framed there under and any other laws affecting
this sector with a view to ensure smooth flow of funds on one
hand and national security and national interest on the other.
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TERMS OF REFERENCE (Detailed): Cont..
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To suggest suitable reforms in the statutes regarding Cooperatives and NPOs.
To promote uniform accounting framework for Co-operatives and
NPOs.
To formulate guidelines for state vise auditors empanelment to
interact with the concerned authorities.
To promote good governance, best practices and prudent financial
management in the Co-operatives and NPO sectors/ mutually
aided Co-operative Societies [MACS]/ Self help groups/clusters
and federations.
To promote social audit concept in the NPO and Co-operative
Sectors and conduct awareness programs for the benefit of the
stakeholders.
To provide technical and governance inputs through training,
workshops, resource materials, publications to the management
personnel and members of Governance of Co-operatives and
NPO Sectors.
To constitute an award/recognition for corporate social
responsibility initiative by any NPO/Co-operatives/ Corporates.
To support the initiatives of the State and Central government
and corporations in this sector.
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Statues Governing Cooperatives
and NPO:
Co-operative Societies:
A) Co-operative societies Act 1912
B) Multistate Co-operative Societies Act 2002
C) State Co-operative Societies Act……………(Rajasthan
2001)
D) NABARD Act 1981
E) Mutually Aided Cooperative Societies Act (MACS)
Cont……..
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B)NPO:
a) The Societies Registration Act 1860- Central
b) State vise societies registration act…………..(In Rajasthan 1958)
c) State vise public trust act……………………..(In Rajasthan 1959)
d) Companies registered under section 25 , Companies Act 1956
e) Religious Endowment Act 1863
f) The Charitable and Religious Act 1920
g) Any Board/Corporation/Commission formed by State/Central
Government by Separate Act/Non trading Corporation (i.e.
KVIC, Khadi Board, CAPART, Food Corporation, OBC Commission,
Social Welfare Board,
Housing Board etc.)
Note: Indian Trust Act 1882, (Preamble of this act says that it is act
for private trust and its trustees)
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COOPERATIVE SOCIETY
Vs SOCIETY?
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Co-operative Society Vs Society:
Cooperative Society:
Basic Principles- 1) Voluntary and Open Membership
2) Democratic member Control
3) Member Economic Participation
4) Autonomy and Independence
5) Education, Training and Information
6) Co-operation among Co-operatives
Society/NPO:
Basic Principle- 1) Voluntary and Open membership
2) Democratic member Control
3) No Profit Object
4) Autonomy and independence
5) For social/charitable purpose
6) Service to the society at large
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IMPORTANT FACTS ABOUT COOPERATIVE AND
NPO SECTOR IN INDIA:
•Year 2012, has been declared as International Year of Cooperatives by
United Nations of States. (Launched on 31st Oct, 2011)
•In India, Cooperative and NPO is the third largest sector of the
economy.
• Form birth till death, Cooperative/NPO sector affects each and every part
of our life. It is present in our routine and day to day life.
•There are more than 10 Lacs NPO in the India
•NPOs employ more than 25 million persons on paid and volunteer basis
• 10 States cover more than 80% of the society i.e. Maharashtra, Andhra
Pradesh, UP, Kerala, Karnataka, Gujrat, WB, Tamilnadu, Orrisa and
Rajasthan
• Following are the facts from Annual Report 2009-10, FCRA, Ministry of
Home Affairs :
a) A total of 38436 associations have been registered under FCRA
Act 2010 upto 31/03/2010.
b) 21508 Associations reported a total receipt of Rs. 10337.59
Crore as foreign contribution.
c) TRENDS
OVER LAST 10 YEARS:
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TRENDS OVER LAST 10 YEARS YEAR:
YEAR
No. of
Registered
Associations (As
on 31st march of
financial year)
No. of
Reporting
Associations
Amount of
Foreign
Contribution
(Rs. in Crores)
1999-2000
21244
13986
3924.63
2000-2001
22924
14598
4535.23
2001-2002
24563
15598
4870.52
2002-2003
26404
16590
5046.51
2003-2004
28351
17145
5105.46
2004-2005
30321
18540
6256.68
2005-2006
32144
18570
7877.57
2006-2007
33937
18996
11007.43
2007-2008
34803
18796
9663.46
2008-2009
36414
20088
10802.67
2009-2010
38436
21508
10337.59
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New Trends: Corporate Social Responsibility
•It is organization's responsibility in the favor of
society, employees and environment .
•Big corporate houses and Celebrities at National and
International level have created large funds and are
organizing and promoting social events in the filed of
Education, Health, Poverty, Food, Woman etc.
•There are many companies , which are participating in
various programs for the welfare of society:
1) Microsoft: World Food Program, Save the Children
etc.
2) SAP: Research, school, education
3) WIPRO, TATA, BPL, Infosys, Amul, Reliance at
national and international level are running various
social programs for Health, Education, Poverty,
Food etc.
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Professional
Opportunities
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Professional Opportunities:
Consultancy/Advisory:
Consultancy/Formation of Cooperative Society and NPO
Advisory on various domestic grants/subsidies/government schemes
Advisory on various international grants/ subsidies/schemes
Accounts Consultancy
Project Consultancy
Audits:
Statutory Audit under various statues- (Registered under relevant act)
Internal Audit
Audit U/s 12A(b) of the Income Tax Act
(If total income>Basis exemption limit)
Audit under Foreign Contribution (Regulation) Act,2010
(As per Rule 17(1) of the Foreign Contribution Rules 2010).
Audit on behalf of Donors and Funding Agencies
Cont……
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Professional Opportunities:
Others:
Reviewer of the financial management system
Trainers and resource persons
Financial Managers and CFOs
 Team Member of Senior Management and CEOs
Member in Board or in governing bodies
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SCOPE FOR CHARTERED ACCOUNTANTS: Cont..
 Consultancy:
Professional Consultancy :The auditor has great opportunities to
advise the organisation regarding review of financial statements, application
of income, accumulation of income, investments of funds, filing application
for accumulation and such other requirements to obtain the necessary
exemption under the Income-tax Act 1961.
Audits:
Audit under various statues: NGO s has to get its accounts audited
by Chartered Accountants as per their statues under which they are
registered.
 Audit U/s 12A(b) of the Income Tax Act: As per section
12A(b) of the Income Tax Act 1961,When the total income of the
organisation(NGO, Cooperative Society etc.) exceeds the basic exemption
limit in any previous year, the accounts of the organisation have to be
compulsorily audited.
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SCOPE FOR CHARTERED ACCOUNTANTS: Cont. 2
 Audit under Foreign Contribution (Regulation) Act,2010:
Every organisation in receipt of foreign contribution must get its accounts
audited by a Chartered Accountant under Rule 17(1) of the Foreign
Contribution Rules 2010.
In the case of a registered organisation, audit is compulsory even though
no funds are received during the year.
Audit on behalf of Donors and Funding Agencies: Most
donors require an audit report so as to ensure that project has been
implemented as per the agreement.
Others:
Employment Opportunities: Large NPOs employ and trained
qualified accountants and Finance Managers on a regular basis on attractive
pay packages.
Chartered Accountants are also doing good work as CFOs and Finance
Managers in many medium and large NPOs.
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SCOPE FOR CHARTERED ACCOUNTANTS: 3
 Member
in Governing Board of NPO/NGO: Chartered
Accountants are financial experts , hence they could be appointed in the Boards,
Governing Bodies and Committees of NPO sector organisations.
Advocacy/Lobbying for Accounting Standards, Laws etc: The
sector faces many challenges due to new laws, rules and regulations. There is a
great need to lobby with the respective authority or the Government Agency to
amend the respective legislation or the regulation.
Member of Advisory Board: There is a good scope for Chartered
Accountants to become members of these Advisory Board like Finance
Advisory Committee and play a useful role.
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ACTION PLAN
FOR THE YEAR
2012-13
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ACTION PLAN FOR THE YEAR 2012-13: Cont…
• Collect and consolidate data of multi-state cooperative societies
working in India at state/central level.
• Coordinate with Ministers/Registrars/ concerned IAS officers in
different states of India.
• Coordinate with the various government department of the
concerned ministries working in the area of Cooperatives and NPO
Sector.
• Define scope for Chartered Accountants in Cooperative and NPO
sector and issue publication .
Cont…
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ACTION PLAN FOR THE YEAR 2012-13: Cont…1
•Release Internal Audit manual for Cooperatives and NPO.
• Make available details of foreign funding agencies.
• Release Quick Insight relating to all features of Cooperatives,
NPO and NGO.
• Award and Recognition Function.
•Organize Conclave of Banks, Educational Institutions, Social work
institution, Foreign Funding Institution, Production and Marketing
Societies, Government NPO, Multi State Societies u/s 25 Companies,
FCRA , 35AC, Milk Society, UNICEF , World Bank / Government
etc.
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ACTION PLAN FOR THE YEAR 2012-13: 2
•Provide new Opportunities in KVIC, CAPART, Social Audit,
Management Audit, Internal Audit, Agriculture Sector, SC/
ST/ OBC/ Minorities/Women/Social-Board and Commission,
Flagship Scheme of Government i.e., NAREGA etc.
• Organize Work Shops / Seminars / RRC.
• Exclusive portal consisting various information for the
members.
•Initiate action for Cooperative project Finance.
• Collect data of NGOs filing return under FCRA with the
ministry of corporate affairs.
Cont…
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ACTION PLAN FOR THE YEAR 2012-13: 3
•Publications related to Cooperative and NPO Sector :
-Guidance Note on Audit of Public Charitable Institutions
under Income Tax Act 1961 (2007)
-Technical Guide on Accounting & Auditing in Not-for profit
Organizations/Non- Governmental Organizations (2009)
-Taxations of Charitable Trusts and Institutions (2009)
-Code of Governance for NGOs (2009)
-A study on Foreign Contribution Regulation Act- 1976, An
analysis, Commentary and Review (2010)
-Applicable Accounting Standard ????
- Applicable Auditing Standard ???
- New publication with Internal Audit Standard Board???
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COOPERATIVE
SECTOR
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HISTORY:
-After independence 1947- India- welfare state
-Help of people in education/health/social welfare and
development
-Firstly started in agriculture and allied sectors.
-Merging resources of
problems
farmers for solving common
-The problems of rural indebtedness and the resultant
conditions of farmers created an environment for the chit
funds and cooperative societies.
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Legislative History: Cont..
•Cooperative Credit Societies Act, 1904 - The First
Incorporation
As its name suggests, the Cooperative Credit Societies Act was restricted to
credit cooperatives.
•Cooperative Societies Act, 1912
Under this Act, Urban cooperative banks converted themselves into Central
Cooperative Banks with primary cooperatives and individuals
as
their
members.
•Multi-Unit Cooperative Societies Act, 1942
With the emergence of cooperatives having a membership from more than one
state such as the Central Government sponsored salary earners credit societies,
This act came in force.
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Legislative History: 1
•NABARD Act, 1981
The National Bank for Agriculture and Rural Development (NABARD) Act
was passed in 1981 and NABARD was set up to provide re-finance support to
Cooperative Banks and to provide resources of Commercial Banks and
Regional
Rural Banks to increase credit flow to the agriculture and rural sector.
•Multi-State Cooperative Societies Act, 1984
With the objective of introducing centralised legislation and to bring
uniformity in administration and management, the MSCS Act of 1984 was
enacted.
•Multi-State Cooperative Societies Act, 2002
Unlike the State Laws, which remained as a parallel legislation to co-exist with
the earlier laws, the MSCS Act, 2002 replaced the earlier Act of 1984.
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Types of Co-operatives:
Although all types of cooperative societies work on the same principle, they differ with
regard to the nature of activities they perform. Followings are different types of cooperative societies that exist in our country.
Consumers’ Co-operatives
Producers’ Co-operative Society
Co-operative Marketing Society
Co-operative Farming society
Housing Co-operatives
Agricultural Co-operatives
Co-operative banks/Credit Society which may be further sub-classified as:
-Primary Urban Co-operative Banks.
-Primary Agricultural Credit Societies.
-District Central Co-operative Banks.
-State Co-operative Banks.
-Land Development Banks.
Others:
 Khadi
Village and Cottage industry
Milk
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Sector vise Classification: Cont……
Cooperative Society:
-GSS ( Gram Seva Sahkari Samiti)- CCB (Central Cooperative Bank)-Apex BankNABARD/Reserve Bank
(Purpose-short term/mid term loan to members)
- KVSS (Kray Vikray Sehkari Samiti)- RAJ FED- NAFED
(Purpose- Trading by any person)
- PLDB (Primary Land Development Bank)-SLDB- NABARD
(Purpose- Long term loans to members)
-UPHAR/SAMRIDHI/NAV JEEVAN/SHOWROOM- CONFED-NAFED
(Purpose- Trading of consumer products by any person)
- Primary Bunkar Sangh-Apex Bunkar Sangh
(Manufacturing/Trading by members)
-Karmchari Bachat And Sakh Sahkari Samiti
- Fisheries
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Non Profit
Organizations
(NPO)
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HISTORY:
In the early 1970s a new breed of organizations emerged
called ‘voluntary organizations.’
These organizations were started by people committed to the
cause of the poor and the downtrodden.
In the late seventies and early eighties, such organisations
multiplied and spread all over the country.
They started receiving both local and international donations
for various programmes and activities.
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Abbreviations for Societies/NPO:
•NGO
•NPO
•NFPO
•VO s
•VDO s
•GONGOS
:- Non Government Organization
:-Non Profit Organization
:-Not for profit Organization
:-Voluntary Organization
:-Voluntary Development Organization
:- Government Promoted NGO
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Sector vise Classification:
NPO:
1) Education
3) Medical
5) Old Age
7) For Women
9) For Tribal's
11) Awareness
13)Village and Cottage Industry
15) Rural Development
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2) Social
4) Legal
6) Orphanage
8) For Children
10) Environment
12) Khadi
14) Health
16) Others
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NPOs working at National and International
Level:
At National Level: (inclusive list)
1)CAPART (various NGOs are currently run by this organization)
2)NACO ( Various NGOs are run by this organization)
3) SNGO
4) Various NGOs run by Central Social Welfare Board, Department of Health
& Family Welfare, Ministry of Social Justice & Empowerment etc.
At International Level: (inclusive list)
1) Red cross
2) Lions Club
3) Rotary Club
4) Lioness Club
5) SMILE
6) Help Age India
7) Global Shikha
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Sources of funds of NPO:
Self-generated funds, loans, grants and donations.
Funds from the Governments of other countries.
Numerous funding organisations who provide from their own
funds.
Funds raised from the public or their respective Governments.
The Government of India and the State Governments also
provide large amounts of funds from the social sector allocation
and make it available to the various organisations working in the
NPO sector in India.
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Suggestions:
Members are always welcome to give their valuable suggestions
regarding development and enhancement of Cooperative and NPO
sector in India.
•Members can give their suggestions at:
Committee’s Mail ID: congos@icai.org or
President’s mail ID: vijaymgarg@yahoo.com
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THANK YOU….
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