Q.State whether the following statement is TRUE or FALSE, and justify your answer:
"The audit of a co-operative society's accounts is optional and may be skipped in a year of loss."

Audit of a co-operative society is a requirement of law, not a choice left to the office-bearers.

Section 81 of the MCS Act, 1960 makes the annual audit compulsory regardless of whether the society made a profit or a loss.

The statement is FALSE.

The audit of a co-operative society is a statutory audit — that is, it is required by law. Section 81 of the Maharashtra Co-operative Societies Act, 1960 makes it compulsory for every society to have its accounts audited at least once in every co-operative year.

This obligation does not depend on whether the society earned a profit or suffered a loss. In fact, a year of loss is exactly when a searching audit matters most, because it may reveal the errors, misuse of funds or bad recoveries that caused the loss. Skipping the audit is not permitted; a society that fails to get itself audited may face action by the Registrar, who is also empowered to arrange the audit.

Do not confuse 'the society made no profit' with 'the society need not be audited'. Audit is compulsory every year; the presence or absence of profit is irrelevant to the duty to be audited.