Tuesday, October 19, 2010

Auditor's Report Issue


*      Action on Auditors Report
Defects in the working of the society pointed out by the auditor appointed to audit the accounts of the Society under section 81 are to be rectified and irregularities are to be remedied by the Society within three months from the date of the audit report.

(i)  Failure to rectify
If the Society fails to rectify the defects disclosed in the course of or as a result of the audit, within the time specified by him, the Registrar may himself take steps to have the defects rectified and may recover the costs from the officer or officers of the society whose duty it was to rectify them – section 87(4).

(ii)  Rectification Report
When the order is issued under Section 82, directing the society to rectify the defects, the Society has to submit a rectification report to the Registrar and Auditor in Form ‘O’. See Rule 73.

*      Issues & Replies

¯     Can the petty cash limit be increased?

Ans. The petty cash limit is Rs. 300 only. However this limit can be increased by amending the relevant bye-law at the General Body meeting.  The amendment proposal is required to be submitted in prescribed form to the Deputy Registrar of the Ward in which the society is located, within two months from the date of the General meeting, in which, approval to the amendment is obtained. It may be noted that generally such approval is not granted.

*      Whether Registrar has power to ask for Re-audit of a society?

Ans. Under section 81(6) if it appears to the Registrar, on an application by a society or otherwise, than it is necessary or expedient to re-audit any accounts of the society, the Registrar may by order provide for such re-audit. He is authorised to do so for reasons to be recorded in writing.

*      If a member observes that the Annual Accounts doesn’t give true and fair view of financial status and the managing committee is not accepting his point of view can the member write to the auditor about his observation?

Ans. An auditor is a professional person and expert in his field.  He has given his observation in his audit report. If a member writes to him giving his views it is up to the auditor to consider the observation or not. So it better to write to the Registrar about the matter.  The Registrar may go for re-audit u/s 81(6) of MSC Act. Master Key – 14.8, 14.9 & 14.10.



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