Chapter VI ACCOUNTABILITY

(1) Every co-operative shall keep at its registered office, the following accounts, records and documents; (a) a copy of this Act, with amendments made from time to time. (b) a copy of its articles of association, with amendments made from time to time (c) the minutes books; (d) account of all sums of money received and expended by the co-operative and their respective purposes; (e) account of all purchases and sales of goods by the co-operative; (f) account of the assets and liabilities of the co-operative; (g) a list of members, their fulfillment of responsibilities over the previous financial year, their eligibility to exercise their rights for the current financial year updated within forty five days of closure of the co-operative’s financial year; and (h) all such other accounts, records and documents as may be required by this Act or other laws and regulations; Provided that where a co-operative has branch offices, summarized statements of accounts relating to such branch office/s, shall be available at the registered office for each quarter, within fifteen days of the end of the quarter. (2) Every co-operative shall keep open the books of account and other records for inspection by any Director during business hours, in accordance with the procedure framed by the Board. (3) Every co-operative shall make available during its business hours to any member who so requests, copies of this Act, articles of association, minutes book of the general body, voters’ list and such accounts and records of transactions that relate to that member. (4) Every co-operative shall preserve its books of accounts relating to a period of at least eight years before the current year together with supporting records and vouchers.

(1) A Co-operative shall get its accounts audited by a chartered accountant within the meaning of the Chartered Accountants Act, 1949 : Provided that where a co-operative’s business turnover is less than Rs. Ten Lakhs, it may appoint as auditor, any person/s, from within its membership or outside, with such qualifications as are specified in the articles of association. [Explanation:-- For the purpose of this section, business turnover shall mean the value of sales, services provided and /or loans recovered.] (2) A co- operative, at its Annual General Meeting, shall appoint an auditor. this appointment will be valid only until the close of the next succeeding Annual General Meeting. (3) The remuneration of an auditor may be fixed by the general body or, if not so fixed, by the Arbitral Tribunal. (4) An auditor ceases to hold office when the auditor (a) resigns; (b) is removed from office under sub-section (6); or (c) completes his/her term of office. (5) The resignation of an auditor becomes effective at the time a written resignation is received by the co-operative, or at the time specified in the resignation whichever is later. (6) The general body may, by a special resolution, remove an auditor from office. (7) An auditor, who (a) resigns; or (b) receives a notice or otherwise learns of a Board’s meeting called for the purpose of removing him/her from office; Is entitled to submit to the Board a written statement giving the reasons for the auditor’s resignation or the comments on the proposed removal, as the case may be. (8) A vacancy created by the resignation of an auditor shall be filled up by the arbitral tribunal. (9) A vacancy created by the removal of an auditor, too, shall be filled up by the arbitral tribunal. (10) An auditor appointed to fill a vacancy holds office for the unexpired term of his/her predecessor. (11) The auditor shall be given notice of every general meeting and at the expense of the co-operative, will be entitled to attend and be heard thereat on matters relating to the auditor’s duties as auditor and their exercise. (12) It shall be the duty of the Board to ensure that annual financial statements are prepared and presented for audit within forty-five days of closure of the co-operative’s financial year. (13) Upon the reasonable demand of the auditor of a co-operative, the chief executive shall arrange to (a) provide such access to records, documents, books, accounts and vouchers of the co-operative; and (b) furnish such information and explanations, as are, in the opinion of the auditor, necessary to enable him/her to make the examination and report, and as the chief executive or a present or former Director, members, or employees are reasonably able to furnish. (14) it shall be the duty of the auditor to ensure that audited annual financial statements and the auditor’s accompanying report are furnished to the co-operative within sixty days of the submission of annual financial statements by the Board. (15) The auditor’ report to the members of the co-operative shall; (a) state whether the auditor has obtained all the information and explanations which to the best of the auditor’s knowledge and belief were necessary for the purpose of the auditor’s audit; (b) state whether the co-operative’s balance sheet and income and expenditure account dealt with by the report are in agreement with the books of accounts; (c) indicate the basis on which each asset and liability was valued, and make specific mention of any change in the manner in which such valuation was done in the year under examination and its effect on surplus/deficit; (d) indicate the amount of the surplus earned/deficit incurred from provision of services to non-members as distinct from surplus/ deficit accruing because of members or in normal course of business; (e) indicate every deviation in actual expenses and income from the estimated expenses and income in the approved budget; (f) specify the gross remuneration and/or honorarium and/or allowances paid and/or value of benefits provided, if any, to the chief executive, any of the office bearers, or Directors, in the financial year under audit; (g) state whether or not any of the office bearers or Directors had become, at any time during the year under review, ineligible under this Act to continue in office as an office bearer or Director; and (h) state whether the decisions on disposal of surplus or assessment of deficit, of the general body, at its previous annual general meeting were implemented correctly and completely or not.

(1) Every year, within thirty days of the holing of the annual general meeting, every co-operative shall file the following return with the Registrar; (a) annual report of activities; (b) audited annual statements of accounts with auditor’s report; (c) statistical statements indicating name of the co-operative; core services

(1) The Registrar may, after first providing an opportunity to the co-operative concerned to present its case, for reasons to be recorded in writing, on his/her own motion, or on the application of a secondary co-operative to which the co-operative is affiliated, or of a creditor to whom the co-operative is indebted, or of not less than one-third of the Directors, or of not less than one-tenth of the members, hold an inquiry of cause an inquiry to be made into any specific subject or subjects relating to any gross violation of any of the provisions of this Act by the co-operative. (2) Except when an inquiry is undertaken of the Registrar’s own motion, the Registrar shall order an inquiry only after the receipt of a fee, from the applicant or the applicants, deemed sufficient to meet the costs of the inquiry to be conducted. (3) The inquiry shall be completed within a period of one hundred and twenty days from the date of ordering the inquiry. it is further provided that the Registrar may not extend this period beyond sixty day. (4) The Registrar shall, within a period of thirty days from the date of the completion of the inquiry, as specified in sub-section (3), communicate the report of the inquiry or the reasons for the non-completion of the inquiry, as the case may be, (a) to the co-operative concerned; (b) to the applicant secondary co-operative, if any; (c) to the applicant- creditor, if any; (d) to the person designated by the applicant-Directors, if any; (e) to the person designated by the applicant- members, if any; and (f) to any person, on payment of fee specified by the Registrar.

(1) Any person who willfully or knowingly makes or assists in making a report, return, notice or other document required in this Act to be sent to the Registrar that contains an untrue statement of a material fact or omits a material fact whose absence makes a statement in the report misleading shall be punishable with imprisonment which may extend to two years or with fine which may extend to ten thousand rupees or with both. (2) Where the person guilty of an offence under sub-section (1) is a body corporate and whether or not the body corporate has been prosecuted or convicted, any Director or officer of the body corporate who knowingly authorizes, permits or acquiesce in the offence is also guilty of an offence and liable on summary conviction to imprisonment which may extend to ninety days or with fine which may extend to one thousand rupees or with both. (3) Every person who: (a) without reasonable cause, contravenes any provision of this Act for which no penalty is otherwise provided; or (b) fails to give any notice or send any return or document that is required by this Act; is guilty of an offence and is liable on summary conviction to a fine which may extend to ten thousands rupees. (4) An offence by a co-operative shall be deemed to have been also committed by office-bearer of the co-operative bound by the articles of association thereof to fulfil the duties whereof the offence is a breach, or if there is no such office-bearer, then by each of the Directors, unless the office- bearer or the Directors, as the case may be, prove to have attempted to prevent the commission of the offence (5) Where a person is convicted of an offence under this Act, the Court may, in addition to any punishment imposed, order the person to comply with the provisions of the Act. (6) No prosecution for an offence under this Act shall be commenced after two years from the time when the cause of action or the subject matter of the complaint arose. (7) No civil remedy for an act or omission under this Act is suspended or affected by reason that the act or omission is an offence under this Act.

(1) The articles of association of each co-operative shall provide for the constitution of an Arbitral Tribunal as defined in section 2 (1). (2) The term of office shall be not more than three years;