Q.Explain the contents of a co-operative audit report and the process of rectification of defects.

Audit is completed in two steps — the auditor writes down what he found, and the society puts right what was wrong.

A co-operative audit is completed in two connected stages — the audit report and the rectification of defects.

A. Contents of the audit report. After completing the audit, the auditor submits a written audit report (with a detailed audit memorandum) to the society and to the Registrar. A co-operative audit report typically contains:

1. a statement of whether the balance sheet and profit & loss account give a true and fair view of the society's affairs;
2. the audit class (A, B, C or D) awarded to the society;
3. a list of the defects, errors, irregularities and breaches of the Act, Rules or bye-laws found during the audit;
4. particulars of any losses, misappropriation or negligence, naming (where possible) the persons responsible, so that the loss can be recovered from them;
5. suggestions for improving the society's working, record-keeping and recovery.

B. Rectification of defects. A report is useful only if its findings are acted upon. The society is therefore required to rectify the defects:

• the managing committee considers each defect pointed out in the report;
• it takes the necessary corrective action — correcting wrong entries, recovering losses, making good shortages, obtaining sanctions it had omitted, and tightening its procedures;
• it then submits a rectification report to the Registrar within the prescribed period, stating what has been done about each defect. …

Do not describe only the audit report and stop there. A full answer covers both stages — the contents of the report and the rectification of defect …