Supervisory Powers of the Registrar — Audit, Inspection and Inquiry

The second and, from the members' point of view, the most valuable group of the Registrar's powers is the power to keep a working society healthy and honest through audit, inspection, and inquiry. Because members entrust their money to the managing committee and often cannot personally check how it is being used, the Act makes the Registrar the guardian of the members' interests by giving him these supervisory powers.

The most important of these is the audit of accounts under Section 81 of the Act. Section 81 requires that the accounts of every co-operative society be audited at least once in each co-operative year, and this audit is to be conducted by the Registrar or by an auditor authorised or appointed by him (or, under the modern scheme, from the panel maintained for the purpose). The auditor examines the books, verifies the cash and stock, checks whether transactions are in accordance with the Act, Rules, and bye-laws, and points out irregularities, losses, and mismanagement. The audit is not a mere formality: it is the principal means by which the true financial condition of a society is brought to light every year, and it is on the strength of an audit report that many of the Registrar's other powers, such as inquiry, surcharge, or winding up, are set in motion. …