Q.Why is audit made compulsory for co-operative societies under the Act, and what does the auditor do?

A society runs on the small savings of ordinary members, so the law makes an independent check of its accounts compulsory every year.

A co-operative society handles the savings of many members of limited means and often enjoys State support, so the Act makes an independent yearly check of its working essential.

Why audit is compulsory: (i) to protect members against fraud, mismanagement and misuse of funds; (ii) to ensure the accounts show a true and fair picture; (iii) to detect and point out defects, irregularities and losses so they can be corrected; (iv) to build the confidence of members, creditors and financing banks; and (v) to help the Registrar supervise the movement. Under Section 81, the accounts of every society must be audited at least once in every co-operative year by the Registrar, an auditor authorised by him, or an approved panel auditor. …

Treating audit as only an arithmetical check. Under the Act it also grades the society and points out defec …