New Format of Audit Report for financial year 2015-2016

To,
      The Chairman /Secretary
            ___________________
Sub : Submission of Statutory Audit Report for the accounting year ended 31st March, 2016.
Sir,
The accounts of ______ Co-op Housing Society Ltd. have been audited on the basis of record produced and information supplied (oral and written) by the office bearers of the society during course of our audit.  The statement of accounts viz..Income & expenditure A/c. & the Balance sheet, for the aforesaid period have been duly examined and the observation and discrepancies so noticed on the transaction and affairs of the society have been mentioned in audit objection and general remarks.
Please find enclosed herewith the Statutory Audit Report for the accounting year 1stApril, 2015 to 31st March, 2016 along with the following -
1.            Statement of Income and expenditure Account & the Balance Sheet
2.            Auditors certificates, brief introduction & comment on the present status of the society, Auditors Report with audit objections, observations & general remarks & other mandatory details of the society viz table 1, 2 & 3.
3.            Schedule of Infringement of M.C.S. ACT 1960, RULES 1961 as per new amendments in the model bye_laws of the society.
4.            Audit memorandum viz. form no. 1 & form no 28.
Society is instructed to submit audit rectification report in “O” form within three months from the date of obtaining audit report to the office of registrar of co-operative societies without fail.
Thanking you,
                                                                                     AS PER OUR REPORT OF EVEN DATE

                                                                                            FOR ______________________________

                                                                                                                               Chartered Accountants
   Place: Vasai                                                                                                   Firm Reg.No.______________
   Date: /  /
                                                               
                                                                                                                                     
Copy to : The Deputy  Registrar,_____________
————————————–END OF PAGE——————————————— 
FORM No. N-2
[See Section 81 and rule 69 (3)]
An Illustrative Format of Report of the Auditor of Co-operative Society
INDEPENDENT AUDITOR’S REPORT
To
The Chairman/Secretary
____________________
Ref. :- Appointment Letter Reference No._______ Dated_______
Report on the Financial Statements as a Statutory Auditor
1. We have audited the accompanying financial statements of The _____ Co-operative Society Ltd., which comprise the Balance Sheet as at 31st March 2016 and the Statement of Profit and Loss / Income & Expenditure for the year ended, and a summary of significant accounting policies and other explanatory information incorporated in these financial statements of the Society alongwith its Branches audited by us for the period 1stApril 2015 to 31st March 2016. *
Management’s Responsibility for the Financial Statements
2. Management is responsible for the preparation of these financial statements in accordance with Maharashtra Co-operative Societies Act, 1960 & Rules there under. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the applicable Standards by The Institute of Chartered Accountants of India and under the MCS Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Society’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts together with the notes thereon give the information required as per the Maharashtra Co-operative Societies Act 1960 and the Maharashtra Co-operative Societies Rules 1961, and any other applicable Acts, and or circulars issued by the Registrar, in the manner so required for the society gives a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the society as at 31st March 2016;
(ii) in the case of the Statement of profit and loss / Income & Expenditure of the profit/loss for the year ended on that date; and
Report on Other Legal and Regulatory Matters
7. The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of the Maharashtra State Co-operative Act.
8. We report that :
(a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory.
(b) The transactions of the Society, which have come to our notice, have been within the powers of the Society.
(c) The returns received from the offices and branches of the Society have been found adequate for the purposes of our audit.
9. In our opinion, the Balance Sheet and Profit and Loss / Income & Expenditure Account comply with applicable Accounting Standards.
10.  We further report that :
(i) The Balance Sheet and Profit and Loss / Income & Expenditure Account dealt with by this report, are in agreement with the books of account and the returns.
(ii) In our opinion, proper books of account as required by law have been kept by the Society so far as appears from our examination of these books.
(iii) The reports on the accounts of the branches audited by branch auditors have been dealt with in preparing our report in the manner considered necessary by us.
(iv) for the year under audit, the society has been awarded “__” classification.
Signature
(Name of the Member Signing the Audit Report / Name of Auditor)
(Designation)
Membership Number
Firm Registration Number
Audit Panel Number
Place of Signature:
Date of Report:
Note :- in case the auditor have not audited all branches or taken assistance of other auditor or branches are audited by another auditor appointed by bank, following lines should be inserted in above report.
*These unaudited branches account for ______________________ per cent of advances,
_______________ Per cent of deposits, ___________________ per cent of interest income
and____________________  Per cent of interest expense.
 —————————————END OF PAGE——————————————
_________________________________________________________________________
Part A :-
1.    Financial embezzlement                                 :           Nil
2.    Misappropriation of funds                               :           Nil
3.    Improper appropriation of funds                     :           Nil
4.    Effects of the transaction to be caused on     :           Loss of interest because of the society due to policy decision.                                  keeping huge balance in saving
                                                                                    a/c.
5.    Improper and irregular loan transaction          :           Nil
6.    Improper investment                                       :           Nil
INFRIGMENT OF THE M.C.S. ACT 1960 RULES 1961 & THE BYE-LAWS OF THE SOCIETY
Sr.No.
Act
Rules
Bye-Laws
Details Of Infringements
1
38
32
141(i)
Member’s register in I form.
2>>>
26
32
NOMINATION NOT FULLY RECEIVED
3
33
141(2)
List of members in “j” form not kept on record
4
82
73
153
Audit rectification report in prescribed“O” form submission to registrar witin prescribed limit.
5>>>
154
Conveyance of the property
6>>>
160
Insurance of building
7
071 (a)
Defaulter member 3 months
8
127 (i)
Managing committee meeting
9>>>
145
Payment beyond the limit in cash
10
75(iI)
95(9)
A G M within prescribed limit
11>>>
24(a)
14
Education & Training fund collection
12>>>
70
54,55
 15
Investment of fund
13>>>
65
141 (I to 16)
Required registers to be kept (property reg.)
14
73
115
Reservation for female member on the managing committee.
15.
73FF
119 B
Disqualification for membership of managing committee.
16
29
Restriction of transfer of shares & property.
17
9
Issue of share certificates to the members witin the prescribed limit.
18.
61
146(a)
Drafting financial statement after the prescribed limit.
19
144
Cash in hand beyond the prescribed limit..
20
160
124
 Handover the charge to new committee.
22>>>
73 b 73 c
114
Strength of the meeting.
Pl.note : Only >>> mark breach are applicable to the society
—————————————–END OF PAGE——————————————– 
Part B :-
A  Management part               :           Introduction  :                      
Name of the society               :           ——–
Register Address                    :           ——-
Reg. no & date                        :           ——-
Period of audit                         :           ——–
Audit classification                  :           ——-
Society’s last election             :           ——-
Date of end of the tenure of   :           ——-
Present committee                 :
            —————————————————————————————————————–
2    Membership                            :           ———-
3    No of committee meeting       :           ————
4    Annual general meeting          :           ———–
5    Special general meetings       :           ———–
6    Audit compliance report          :           ———-
7    Compliance of statutory         :           ————-
      Controls.
      B    Finance management           :
1.    Appropriation of funds            :           No
2.    Provisions                               :           Provisions made towards outstanding liabilities.
      C   Loan transactions                    :           Not applicable
Cash balance : Rs.——–  were lying in hands at the end of 31-03-2015.
Bank Balance : Society has saving a/c in following banks.The details are as under.
T.D.C.C Bank                                                                        Rs.   ———-
Thane District Central Co-op Bank                                       Rs.    ——-
Society’s liabilities status as on 31-03-2016.
Watchman Salary payable                                                     Rs. ——
Audit fee payable                                                                    Rs. ——
Electriicty charges payable                                                    Rs. ——
Education fund                                                                        Rs  —–
Valuation of property :
Land & building :                                                         Not shown in the balance sheet.
                                     
1.    No personal expenses recorded in income & expenditure a/c.
2.    All the expenses incurred for fulfilling the objectives of the society.
3.    There are no such transaction which hurts the interest of the society.
4.    Society is fulfilling its liability towards the members
5.    There is not any loan kept overdue by the society.
6.    Amount to be spent for fulfilling the objectives : Yes but not other than routine management expenses.
7.    Society has not received any financial assistance from any authority for fulfillment of its objectives.
Society’s managing committee formed on Date:              as follows.
———————                                                          Secretary
——————–                                                           Chairman
——————–                                                           Treasurer
———————-                                                         Member
———————-                                                         Member
 ——————————–END OF PAGE———————
 
PART C :  Audit objections & general remarks.
Compliance of the following not done
1      Conveyance deed is not yet executed.
2      Insurance of the society premises is not yet taken.
3      Audit rectification report not submitted to Registrar for the audit memo of 2014.
4      Education fund is due for the year 2013-14.
5      No affiliation has been taken with the district housing federation.
6      Sinking fund not provided in the balance sheet.
7      Society has not filed Income Tax Return for the income of mobile tower rent.
8       Property & lean register not kept on records.
9      Fixed deposit not taken in 2013-14 & 2014-15 also.Society should have taken fixed deposit of share capital, reserve fund & sinking fund.
10   Huge balance in saving a/c.Society has maintained huge balance in saving a/c throughout the year.Society should have kept at least 450.000.00 in short or medium term fixed deposit.There is a interest loss of Rs.25546.00 during 2013-14 & 2014-15.
11   Membership to the members : There are 12 members in the society.out of which 11 members are regularize & adopted as the members of the society & the membership of Sr.12, the previous land owner is not yet cleared on the grounds of settlement of prior liabilities & submission of proper documentation  to the society.
      Suggestions.
1      Send audit rectification report within 90 days from the date of obtaining audit report.
2      Provide for sinking fund @ .25% from the available funds.
3      Don’t keep huge balance in saving a/c. Surplus amount in hand must be invested in short or medium term fixed deposits.
4      Keep cash in hand below Rs.5000.00.Erroer of crossing the maximum limit is appearing because the society is withdrawing the funds in the ending days of the month.if these are withdrawn in first week this error will be automatically rectified.
5      Strength of the managing committee shall be 6 male members 2 female members.
6      Take the insurance of the society premises.
7      Form a special grievance redresser committee of senior person to bridge co-ordination between the members & the managing committee.
8      Society should comply general remarks no 1 to 11 at the earliest.
DATE   :                                                                                            PLACE :                                            
           
————- END OF PAGE —————
Statutory Report as required  u/s 81 (2)
   
PERIOD OF AUDIT                    :   —————–
Schedule: I.               Transaction involving infringement of the provisions of the Act.
                                    Rules and Bye_laws.
                                    : Vide General Remarks.
Schedule: II.              Particulars of sums, which ought to have been but have not been
                                    Brought in to the account.
                                    :     NIL
Schedule: III.             Improper and irregular payments.
                                    :      NIL
Schedule: IV:                        List of doubtful debts.
                                    :     NIL
Schedule: V.             List of Movable & Immovable Property and Other Assets.
                                    Considered doubtful of realization.
                                    :     NIL
DATE   :  
PLACE :
                       
           
_________________________________________________________________________
NAME OF THE SOCIETY          :  ———–
   
PERIOD OF AUDIT                    :   ————
DATE   :  
PLACE:
 ————-END OF PAGE———-
FORM NO. 1
(AUDIT MEMO FOR ALL TYPES OF CO-OP SOCIETIES)
NAME OF THE SOCIETY
SR. NO. OF THE AUDIT MEMO AS PER AUDIT REGISTER
TALUKA OR BLOCK
DISTRICT
REG NO
FULL REGISTER ADDRESS
DATE OF REGISTRATION
AREA OF OEPRATION
NO OF BRANCHES  DEPOSIT AND  SHOPS (GIVE
(REMARKS)

1. AUDIT INFORMATION

1)
FULL NAME, DESIGNATION & HEAD QUARTERS OF THE AUDITING OFFICER
2)
PERIOD COVERED DURING THE PRESENT AUDIT
3)
DATE ON WHICH
1) AUDIT WAS CONMMENCED AND
     CONTINUED
2) AUDIT WAS COMPLETED
3) AUDIT MEMO WAS SUBMITTED
2.  MEMBERSHIP
i.
NO. OF MEMBERS:     a)  Individuals            i)Ordinary                                                                                                                                  Ii) Nominal
                                                   B) Societies
                                                   C) Others
Give details of other Members, if any.
11 +1
TOTAL
11+1
ii)
Have new members been duly admitted? Have they paid entrance fees?
No share transfers during 2014-15.
iii)
Are their written applications in order & are they filed properly?
==do==
iv)
Is the member’s register kept in Form “I” prescribed under Rules 32 and 65 (i) of M.C.S. Rules 1961?
Yes
v)
Is the list of members kept in Form “J” under Rule 33 of the M.C.S. Rules 1961?
Yes
vi)
Have due remarks been pass against the names of the deceased, dismissed, or resigned members in the member’s register?
No share transfer during 2014-15.
vii)
Are resignations in order and are they duly accepted?
No resignations receivd in 2014-15
viii)
Have nominations made under Rule 25 of the M.C.S. Rules 1961 been duly entered in the nomination register under rule 26?
Yes
Register not yet maintained.
3) SHARES
 i)
Are applications for shares in order?
Yes Except Memb sr no 12
ii)
Is share register written up-to-date?
Yes
iii)
Do the entries in share register tally with the entries in the cash book?
Yes
iv)
Is share ledger written up-to-date?
NA
v)
Do the total of share ledger balances tally with the figures of share capital in the balance sheet?
NA
vi)
Have share certificates been issued to the share holders for the entire share subscribed?
No
vii)
Are share transfers and refunds in accordance with the provisions of the Bye-laws, Act and Rules?
No share transfer in 2014-15
4) OUTSIDE BORROWINGS
 i)
What is the limit fixed in the Bye-laws for borrowings of the society?
No outstanding borrowings.
ii)
Has it been extended?
Not applicable.
iii)
If so, state whether necessary permission has been obtained from the competent authority?
Not applicable.
5) MEETINGS
 i)
Give dates of
a)       Annual General Meeting
b)       Special general Meeting
ii)
State the no. of meetings held during the period as follows : -
a)       Board or Managing Committee Meetings
b)       Executive or Sub-Committee Meetings
c)       Other Meetings
-
6) RECTIFICATION REPORT
 i)
Has the society submitted audit rectification reports of the previous audit memos?  If so, give the dates of submission.  If not, state the reason for non submission
ii)
Have any important points mentioned in the previous audit memos been neglected by the society.  If so, state them in general remarks
7) AUDIT FEES
 i)
Give amount of fees last assessed – state period for which assessed:
State the date of recovery of the audit fees, name of Treasury and amount credited.(Give No. & date of Treasury Challan)
ii)
If the audit fees have not been paid by the Society, give details about outstanding audit fees and reasons for non-payments.
8) INTERNAL OR LOCAL AUDIT
 i)
If there is internal or local audit state by whom is it done, period covered and whether memo is on the record of the Society.
ii)
State whether there is proper co-ordination between Statutory Auditor and Internal Auditor
9) MANAGING DIRECTOR / MANAGER / SECRETARY
  A  i)
Name of the Officer:
ii)
Pay drawn:
Grade:
iii)
State other allowances, if any, any facilities given such as rent free quarters etc.
iv)
State whether he is a member.
v)
If so, whether he has borrowed or has been given any credit facilities? State the amount borrowed and the amount over dues if any.
vi)
If other amounts are due from him, give details
B)
Obtain a list of staff showing names, designations, qualifications, scales, present pay and allowances given, dates from which employed, security furnished.
07) BREACHES
 i)
Do the society posses a copy of Act, Rules and the registered Byelaws?
ii)
Give only no. of breaches of the Act, Rules and Bye-laws.
1)       Section Nos.    ……………….
2)       Rules Nos.       ……………….
3)       Bye-laws Nos………………….
iii)
Have any rules been framed under the Byelaws?
Are they approved by appropriate authority?
Are they properly followed? (These breaches should discussed in brief in general remarks)
11) PROFIT & LOSS
i)
What is the amount of profit earned or losses incurred during the last co-operative year?
ii)
State how the net profits are distributed?
(In case of non business societies, figures of surplus or deficit may be given against query No. 11 (1) above
12) CASH, BANK BALANCES AND SECURITIES
(a)
Cash :
      1)
Count cash and sign the cash book stating the amount so counted and the date on which counted
      2)
Who produced the cash for counting? Give his name & designation.  Is he authorised to keep cash?
      3)
Is it correct according to the cashbook?
      4)
Are the arrangement for safety of cash in safe and cash in transit adequate?
(b)
Bank Balance
Do the bank balances shown in bank pass book or bank statements and the bank balance certificates tally with such balances shown in the books of accounts?
(c)
Securities
      1)
Verify securities physically and see whether they are in the name of the society.
      2)
Are dividends and interest being duly collected?
      3)
If securities are lodged with the bank, are relevant certificates obtained?
      4)
Is investment register kept & maintained up-to-date
13) MOVEABLE & IMMOVEABLE PROPERTY
1)
Are relevant registers maintain and written up-to-date
2)
Verify property physically and obtain its list.
Do the balances tally with balance sheet figures
3)
In case of immovable property including land, verify title deeds & see whether they are in the name of society.
4)
Is the property is duly insured wherever necessary, If so, give details in general remarks
5)
DEPRECIATION
i) Is due depreciation charged?
What is the rate of depreciation charged on various assets?
6)
Have you discussed the draft audit memo in the Board or Managing Committee Meeting? If not state the reason for the same.
DATE   :                               
PLACE:
   ————END OF PAGE ———
  
FORM NO. 28
Audit Memo Co-operative Housing Societies
Part II
I.       Borrowings:
(i) State the loans obtained by the Society for
various purposes from Government & other agencies:
 1.Agency Sanctioning Loan                                       :
 2.Purpose for which the Loan is sanctioned.              :

 

  1. Amount of Loan Sanctioned :
4.       Maximum amount drawn  :
5.       Repayments made  :

 

      6.      Outstanding:

 

7.       Amount overdue, if any :

 

8.       Remarks  :

 

(ii) Are repayments of loans punctual.:

 

.     (iii) Are all conditions laid down for grant of various

 

loans and credits observed? Note breaches, if any.  : (iv) Are necessary documents executed in favour of the authority sanctioning the loan.
2.       Government Financial Assistance:

 

(i) What is the amount of Government subsidy
sanctioned and received by the Society.                     :           .
(ii) Has Government sanctioned any amount for
land development? If so, state the amount. Have

 

development expenses exceeded the said amount.  :
3.       Membership:
(i) State whether in case of backward class  co-operative housing societies, certificates from  the social welfare officers are obtained for their  eligibility to membership and obtaining of financial   assistance.                                                                    :
 (ii) State whether certificates are obtained from
officers of the concerned industry in case of the

 

subsidized industrial housing scheme.:

 

(iii) Have declarations been obtained from members

 

 that they and their family members do not own lands  or houses in the area of operation of the Society as

 

per provisions in the Bye-laws.
4.       Lands and their developments:

 

 

(i) State whether lands for constructions of houses  have been secured, purchased or obtained on lease.  Give details of the lands, stating total area, survey
Nos. and C.R.S. Nos. if any, price for which
purchased, lease rent etc.                                             :
(ii) See the title deeds and ascertain whether they
are properly executed in favour of the Society
:
(iii) State how the land has been utilised for
:
(a) Construction of houses
(b) Construction of roads
(c) Open spaces
(d) Other Purposes give details
(iv) Have the layouts and plans for development
been approved by the Municipal authorities before
actual commencement of the work                              :
 (v) Have completion certificates been obtained
from appropriate authorities for drainage, water
supply, roads, etc. before construction work of
buildings is commenced                                              :
5.       Construction of Buildings:

 

(i) (a) Have building constructions commenced  : (b) State the no. of houses or flats constructed and under construction.                                                      :
 (c) Have the completed houses and flats allotted to
Members.                                                                     :
(ii) Are building constructed on contract basis?
See the terms and conditions of contracts and state
whether they have been properly observed.
Note breaches, if any.                                                  :           .
(iii) Are these contracts properly sanctioned by the

 

competent authority as per Byelaws of the Society  :
(iv) Have tenders or quotations been called after  giving due advertisements in local newspapers, If  the works are not given to the contractors quoting

 

 the lowest figures, see whether reasons for the same
are recorded.                                                                :
(v) Are contractors paid after necessary work
progress certificates are obtained from the Architect. Are running and final bills obtained before payment
are made to the contractors.                                        :
(vi) See the terms on which the architects are
employed. Are there any breaches.                              :
(vii) See whether completion certificates have been
obtained from the qualified engineers and architects,
stating that the constructions have been completed
according to approved plans, specifications and
other terms of contracts.                                              :
(viii) Is a property register kept in proper form?
Is it written up-to-date.                                               :
(ix) When buildings are build departmentally, state
whether the following books are kept and written
up-to-date.                                                                   :
(a) Job registers and measurement books.                   :
(b) Stock registers.                                                       :
(c) Are valuation certificates from qualified
engineers and/ or architects obtained                          :
(d) Is expenditure allocated properly between items
of capital and revenue nature                                      :
(x) State whether building has been constructed
according to the original plans and estimates
submitted with the loan applications and which are
approved by the competent authority. Are there
any deviations? If so, are they got approved from
the competent authority.                                              :
(xi) In case of flat-owners societies, see whether
titles to the land have been transferred in the name
of the society.                                                              :

 

(xii) Are buildings and constructions got insured.  :
 (xiii) In case of flat-owners societies, have the  promoters fulfilled their obligations as per  agreement entered with them by the members prior to the registration of the Society.

 

       (xiv) Examine the agreements entered into with the  promoters and see whether they are in the interest of the society.                                                              :           .
(xv) Has the Society executed lease deeds in favour
of members for giving plots and/or buildings on
lease to them.                                                               :
(xvi) Has the Society created sinking fund as per
provisions of the Bye-laws.                                         :
(xvii) Examine the basis on which monthly rents or
contributions are fixed in case of tenant co-partnership
societies or flats owners societies and see that the
following items are adequately covered.                     :
(i) Amounts required for re-payments of loan
instalments.                                                     :
(ii) Municipal and other taxes.                         :
(iii) Lease rent                                                  :
(iv) Service charges and common expenses  :

 

(v) Contribution to the sinking fund.

 

:
6.       Loans to Members:
(i) Are recoveries of loans punctual
:
(ii) State the amounts of over-dues.
:
(iii) State what steps are being taken to recover overdue.
7.       Expenditure
Has the expenditure been approved by the
 Managing Committee, from time to time.