Q.Explain the power and duty of the Registrar regarding the audit of co-operative societies under Section 81.

Audit is the single most important annual check that the Registrar carries out to protect members' money.

The audit of accounts is at once a duty imposed on the Registrar and the most valuable of the protections the Maharashtra Co-operative Societies Act, 1960 gives to the members of a co-operative society. It is dealt with by Section 81 of the Act, and it is worth understanding both what the section requires and why it matters.

Section 81 provides that the accounts of every co-operative society shall be audited at least once in each co-operative year. This makes audit not merely a power that the Registrar may exercise if he chooses, but a duty that must be carried out for every society every year. The audit is conducted by the Registrar himself or, more usually, by an auditor authorised or appointed by him for the purpose. The reason the Act insists on a compulsory annual audit is that members entrust their savings to the managing committee and cannot personally verify how the money is being handled; an independent, statutory audit is therefore the members' chief safeguard.

In carrying out the audit, the auditor does a thorough examination of the society's affairs. He examines the books of account and the annual statements, verifies the cash balance and the stock, and checks whether the society's income, expenditure, loans, and investments are in accordance with the Act, the Rules, and the society's own bye-laws. He looks for irregularities such as unauthorised expenditure, misapplication of funds, bad or doubtful debts, and any losses caused by negligence or misconduct, and he records his findings in an audit report, often accompanied by an audit memorandum and, where the law provides, a classification of the society according to its financial soundness. …