Co-operation · Ch 5 — Accounts and Audit of Co-operative Societies
Audit Classification and Appointment of the Auditor
Audit Classification and Appointment of the Auditor
A special and important feature of co-operative audit is that, after examining the accounts, the auditor does not merely certify the figures — the auditor also awards the society an audit class (or grade) that sums up how well the society is being run. This gives members, depositors and the Registrar a quick, honest verdict on the society's overall health.
Audit classification — the grades A, B, C and D. On the basis of the society's overall performance the auditor places it in one of four classes:
| Audit class | What it means |
|---|---|
| Class 'A' | Excellent — very well managed; sound finances, good recovery of loans, records well kept, rules fully obeyed |
| Class 'B' | Good — satisfactory working, with only minor defects that can be easily corrected |
| Class 'C' | Fair / average — noticeable weaknesses in management, recovery or record-keeping that need attention |
| Class 'D' | Poor — badly managed; serious defects, heavy overdues or losses, weak records, breaches of rules |
The class is decided by weighing together several factors: the soundness of capital and finances, the quality of management, the recovery of loans and level of overdues, profitability, the proper maintenance of books and records, and compliance with the Act, Rules and bye-laws. A high grade is a mark of trust that helps the society raise deposits and borrow; a low grade is a warning that puts the society under closer watch by the Registrar. …
The system under which the co-operative auditor places a society in class A, B, C or D according to its overall performance — its finances, management, loan recovery, recor …
The list of qualified auditors approved by the State Government / Registrar from which a co-operative society must appoint its statutory auditor, so as to …