Chapter VII AUDIT AND INSPECTION

(1) Every Cooperative Society shall keep at its registered office the following accounts and records (a) a copy of this Act with amendments made from time to time, (b) the minutes book, (c) registration certificate and a copy of the registered bye-laws and for the amendments registered from time to time with date of amendment. (d) a copy of the authenticated bye-laws of the federation/union of which it is a member and for each of its member Cooperative Societies. (e) account of all sums of money received and expended by the Cooperative Society and their respective purposes. (f) account of all purchases and sales of goods by the Cooperative Society, (g) account of the assets and liabilities of the Cooperative Society. (h) a register showing total membership and the memberwise use of various services, (i) a list of members with voting rights for the current year updated within thirty days of closure of the financial year, U) copies of the board policies, (k) annual report, audit report, special audit report and their compliances. (I) copies of other laws and regulations to which the Cooperative Society is subject, (m) such other documents as are relevant to the functioning of the society: Provided that where a Cooperative Society has branch offices, accounts and records related to the branch, shall be available at the registered office for any period within twenty five days of the end of the financial year.

(2) Copies of this Act, bye-laws, minutes book, voter's and such accounts as related to a member shall be made available to any member during business hours at a fee to be decided by the Cooperative Society. (3) The books of accounts of every Cooperative Society together with supporting records and vouchers shall be preserved for such period as may be provided in the bye- laws subject to any other laws for the time being in force.

auditor selected from the panel prepared by federation. Such Auditor shall either be a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 or form the office of the Registrar. The panel shall also be maintained by the office of the Registrar. Where there is no union/federation such auditor shall be selected from the panel maintained by the Registrar. (2) The auditor's report in addition to the report on the accounts of the Cooperative Society shall also contain report on the attendance at meeting by directors, loans and advances sanctioned to or the business done with the Cooperative Society by the directors, expenditure of board meetings, remuneration pain to directors, expenses reimbursed to directors, expenditure on education and training for members, staff, directors and others. (3) It shall be the duty of the board to ensure that annual financial statements are prepared and present for audit within forty-five days of closure of the financial year. (4) The remuneration of an auditor may be fixed by the board and placed before the general body at its next meeting, for information. (5) The general body of federation may at a special meeting remove an auditor from office by a resolution passed by a majority of the members present and voting. (6) The auditor shall be given notice of every general meeting and will be entitled to attend the meeting. (7) Upon the demand of the auditor of a Cooperative Society the present or former office-bearers, board members or employees of the Cooperative Society shall furnish- (a) such information and explanation, as may be considered necessary, and (b) each of the record, documents, books accounts and vouchers of the Cooperative Society as are, in the opinion of the auditor, necessary to enable him to make the examination and report. (8) Where a Cooperative Society fails to get its annual account audited when due, it shall be the responsibility of the Cooperative Union/ Federation to get the accounts of the Cooperative Society audited within a period of ninety days from the date when the audit was due. (9) The cost of conducting such audit shall be borne by the Cooperative Society. (10) If the Cooperative Union/Federation is unable to get the audit of the Cooperative Society conducted for any reason, the Registrar shall get the accounts of the Cooperative Society audited.

Government or other external individual or institution may be subject to a special audit initiated y the Registrar. (2) The cost of the special audit under sub-section (1) shall be met by the creditor. Provided that where the special audit reveals serious mismanagement in the Cooperative Society, such costs may be recovered from the Cooperative Society or the persons responsible for the mismanagement. (3) Every special audit shall be completed and the report submitted to the Registrar within one hundred and twenty days of its commencement. (4) The special audit report shall contain a statement of :- (a) every payment which appears to the auditor to be contrary to law,

(b) the amount of any deficiency, waste or loss which appears to have been caused by the gross negligence or misconduct of any person in the performance of duties, (c) the amount of any sum received which ought to have been accounted for but is not brought into account by any person, and (d) any material impropriety or irregularity which he may observe in the expenditure or in the recovery of money due. (5) The Registrar shall, within a period of thirty days from the date of the receipt of the special audit report copies of the same to — (a) the applicant creditor, (b) the Cooperative Society concerned, and (c) the Cooperative Tribunal where necessary.

close of the year shall file the following information with the Registrar:- (a) annual report of activities. (b) audited statements of accounts. (c) plan for surplus disposal as approved by the general body. (d) list of names of directors and their terms of office, (e) list of amendments to the bye-laws of the Cooperative Society, (f) declaration regarding date of holding of general body meeting and conduct of elections where due, (g) compliance report relating to audit! special audit/enquiry.

information required by the Registrar in order to enable him to satisfy whether the Cooperative Society has conducted its affairs in accordance with the Cooperative Principles and the provisions of this Act. (2) The Registrar may, of his own motion, and shall on the application, of union/ federation to which the Cooperative Society concerned it affiliated, or of a creditor to whom the Cooperative Society is indebted or of not less than one-third of the directors, or of not less than ten percent of the members, hold an enquiry or cause an enquiry to made into the specific matter or matters relating to any gross violation of any of the provisions of this Act by the Cooperative Society. (3) The Registrar shall order an enquiry only after the receipt of the fee, from the applicant or applicants, deemed sufficient to meet the costs of the enquiry to be conducted. (4) The enquiry shall be completed within a period of four months from the date of ordering the enquiry. (5) The Registrar shall within a period of one month from the date of completion of enquiry, communicate the report of the enquiry- (a) to the Cooperative Society concerned, (b) to the applicant person designated by the applicant to receive such a report. (c) to any member of a Cooperative Society, to any Federation of which the Cooperative Society is a member, to any creditor on payment of fee specified by the Registrar, (d) to the Cooperative Tribunal.

authorised to conduct special audit under section 34 or enquiry under section 36 shall give the concerned Cooperative Society, not less than fifteen days notice in writing of the date on which he proposes to commence the special audit or enquiry: Provided that for special reasons to be recorded in writing, he may give a shorter notice than fifteen days of commence a special audit or enquiry on the authority of the Registrar without such notice.

(2) For the purpose of any special audit or enquiry under this Act, the person conducting such audit or enquiry may - (a) require in writing the chair-person or other authority concerned to produce at the head office of the Cooperative Society such receipts, vouchers, statements, returns, correspondence, notice or any other documents as he may consider for purpose of special audit or enquiry: (b) require in writing, (i) any employee of the Cooperative Society or other authority accountable for or having custody or control or such receipts, vouchers, statements, returns correspondence, notes or other documents, to appear in person or (ii) any person having directly or indirectly any share or interest in any contract with the Cooperative Society to appear in person or by an authorized agent, before him at the head office of the Cooperative Society and answer any question or sign a declaration with respect hereto: (c) In the event of an explanation being required from the chair-person or any other authority concerned invite him in writhing specifying the points on which his explanation is required to meet him at the head office of the Cooperative Society; or (d) exercise such other powers as can be reasonably said to be necessary or the purposes of this section. (3) The person conducting special audit or compliance of the provisions period of not less than seven days for the purpose of compliance of the provisions of sub-section (2), and such compliance shall be mandatory on the persons required to provide information under sub-section (2).

audit report under section 34 or an enquiry report under section 36 to the persons concerned the Registrar may, where the special audit or enquiry report reveal mismanagement on the part of any or all of the office-bearers or directors, without prejudice to any civil or criminal proceeding to which they may be liable- (a) direct the board to convene a general body meeting within such reasonable time as he may specify to enable him to bring to the notice or the general bode, either directly or through his nominee, the findings of special audit or enquiry report, for necessary action; or (b) make a prayer to the Cooperative Tribunal for necessary action. CHAPTER v//- SETTLEMENT OF DISPUTES