Q.Explain the audit classification of co-operative societies into classes A, B, C and D.

Co-operative audit ends not just with a set of certified figures but with an overall verdict on how well the society is run.

A special feature of co-operative audit is that, besides checking the accounts, the auditor awards the society an audit class summing up its overall performance. There are four classes:

• Class 'A' (Excellent) — a very well managed society with sound finances, good recovery of loans, well-kept records and full compliance with the Act, Rules and bye-laws.
• Class 'B' (Good) — a satisfactorily working society with only minor defects that can be easily corrected.
• Class 'C' (Fair / Average) — a society with noticeable weaknesses in management, recovery or record-keeping that need attention.
• Class 'D' (Poor) — a badly managed society with serious defects, heavy overdues or losses, weak records and breaches of the rules.

The class is decided by weighing several factors together: the soundness of the society's capital and finances, the quality of its management, the recovery of loans and level of overdues, its profitability, the proper maintenance of its books and records, and its compliance with the Act, Rules and bye-laws. …

Do not merely name the four classes — explain what each stands for and the factors behind the grad …