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GOVERNMENT OF TRIPURA DEPARTMENT OF CO-OPERATION
CO-OPERATIVE AUDIT MANUAL
CO-OPERATIVE AUDIT MANUAL
SRI NIRANJAN DEB BARMA Minister of Co-Operation Tripura
FOREWARD The Co-Operative Societies today are playing vital role in strengthening the National economy. It is hardly to be emphasized that the importance of the Co-operative movement in our country has greatly increased in regard to the upliftment of the economic condition of the people in general and the weaker section of the society in particular. Their sphere of activities has by now widened to a great extent. Besides arranging for credit facilities for agricultural purposes they are catering to the other needs of the society as well. They are engaged in production, distribution, consumption, house, building, banking, export & import, transport, etc. many big industries including sugar factories in Co-operative sector are being run successfully. The societies have also grown in size and the Government has been trying to see them economically viable. The intelligentsia as also not so-literate and even illiterate persons are greatly associating themselves to improve their lot by means of self-help through mutual help. The economic programme, which alone is the panacea for economic emancipation of our poor people residing particularly in the villages, has been embraced by the Co-operative Societies and they are actively engaged in implementing them. A great responsibility lies upon them for achievement of the goal. A good management and control of the societies in general is essential for their successful functioning and for that purpose the Government has been aiding them with trained and experienced personals and also with financial assistance. The management having no fear of evaluation of their works and checking of their accounts by some independent agencies might go reckless and the interest of the society might be affected adversely. With this objective in view audit of each Co-operative society at least once in each year has statutorily been provide. The importance of Co-operative audit is hardly to be over-emphasized in the present day society. It has assumed greater significance these days when corrupt practices have crept in every walk of our life. Greater responsibility has fallen on the shoulders of the Co-operative Auditors who are watchdog of the Co-operative movement. Success of the movement greatly depends upon the extent to which audit of societies has been able to bring improvement in their working and in curbing out the unfair means where they are found to have been adopted to the detriment of the societies. Co-operative audit has to be objective, suggestive and remedial outlook of the Co-operative Auditors has to be broad based and they have to be sympathetic towards the ignorant, not-so-literate, untrained and inexperienced Office-bearers of the society. The audit should essentially be performance-audit and it should include an impartial just and honest evaluation of working of the societies. All technical aspects should be thoroughly examined. Looking to the above important duties and great responsibilities of the Co-operative Auditors it was quite essential to have a Co-operative Audit Manual for their necessary
guidance. I am glad to see that Department of Co-operation is going to publish a Co-operative Audit Manual of its own. I hope this Co-operative Audit Manual would proved beneficial to not only the Co-operative Auditors but also to other Officers of the Co-operative Department of Govt. of Tripura, different Co-operative institutions and the Co-operators in general. I also do hope that it would bring improvement in the standard of audit and strengthening of the Co-operative movement. Niranjan Deb Barma
B. BHAUMIK, IAS Commissioner & Secretary to the Government of Tripura, Department of Co-operation, (Holding the charges of Registrar of Co-operative Societies in addition). Audit of Co-operative Societies is an integral part of the supervisory system. So proper and timely audit is very essential. It gives not only financial assessment of the Co-operative Society but also an assessment of the Management of that Society. The responsibility for conducting audit rests with the RCS of the State Government. Co-operative movement in Tripura started in 1949 and over the years there has been a gradual expansion in size, numbers and volume of operations of Co-operative Societies in the State. Now Co-operative Societies of diversified activities have come up and with the growth of the Co-operative movement its accounting system also gets complicated. Audit of Co-operatives has become a big job to complete it in time maintaining the quality and efficiency. With development in the Co-operative movement internal structures and procedures in some areas are required to be strengthened and audit of accounts is such an area. The existing instructions/guidelines issued time to time are not sufficient to meet up the requirements of audit of accounts in different Co-operative Societies including banks. So, introduction of an audit manual was a felt need since long in Co-operative sector for the guidance of Officers, Auditors and employees concerned engaged for audit of Co-operatives. With a view to drafting an audit manual for the Co-operation Department a Committee consisting of 6 (six) members headed by Sri K. B. Choudhury, DRCS (TCS Gr. II) was formed. The committee studied the departmental circulars and other relevant instructions in connection with the audit of accounts of Co-operatives. Necessary papers, documents etc. regarding audit of accounts and audit manual of different States were collected and consulted by the Committee to give the present shape of the Co-operative Audit Manual. The Co-operative audit manual has been printed in one volume, which contains 12 Chapters and deals with the audit principles and practices. Different circulars of NABARD, RBI, provision of B.R. Act applicable to Co-operative Banks, etc. are also included in it. It has been designed to equip the Auditors with as much knowledge on all the topics as is desirable from the point of view of economic position of the Co-operatives. I do hope that this manual will server a very useful purpose in increasing the efficiency in conduct of audit of Co-operatives and will be a useful guidebook for the persons engaged for audit. However, I feel deficiencies and errors are inevitable in this work and shall be thankful to those who point out such errors and deficiencies. I am thankful to Sri K. B. Choudhury, TCS Gr. II for his sincere all out efforts in preparing the draft manual and also to other members of the Committee for their help, Co-
operation and suggestions in that regard. I am grateful to Sri J .K. Purakyastha, Joint Secretary, Law, Sri D. K. Choudhury, Sr. Audit Officer, O/O. the A.G., Tripura and Sri M.K. Sengupta, Law Officer-Cum-Draftsman, Office of the Registrar of Co-operative Societies, for their Co-operation and valuable suggestions. I like to express thanks to Sri Bipresh Chakraborty for his help in proof reading of the manual in its printing stage and to Sri Abhijit Chakraborty for taking keen interest in printing this manual in time.
Sl. No. Pages Introduction
1. Background - Objectives of the Manual - 1 - 3 Scope of the Manual
2. MEANING AND SIGNIFICANCE OF AUDIT
Accounting Audit General Principles 3 - 5 Co-operative Audit Kinds of Audit.
3. THE AUDITOR
Duties and responsibilities Powers 5 - 8 Liabilities Responsibility of work done by juniors.
4. PLANNING THE AUDIT
Audit Programme Audit Note book Working papers Techniques -- Period of 8 - 13 Audit engagement Audit pending for long Periods.
5. ROUTINE CHECKING AND VOUCHING
Internal Check & Control Cash Transactions Sales Purchase Routine Checking 13 - 17 Percentage of Checking Vouching main objects.
6. CASH AND TRADING TRANSACTION
Vouching debit side of Cash Book Different types of receipts Vouching credit Side of Cash Book Sanction of Payments Payments of advance Unusual and irregular Items Payment of dividend & Bonous 17 - 25 Repayment of Bank Loan, Cash Credit and Overdrafts, Stationery & Printing Charges, Expenses which should be objected to in Audit vouching touching transactions Purchase proceedings Cash sales Checking of Cash Memo and daily sales register.
Sl. No. Pages
7. VOUCHING LEDGERS Ledgers Trial Balance Adjustment of Nominal Accounts Adjustment of outstanding 25 - 28 Expenses Interest outstanding expenses Prepaid expenses income receive