Co-operative Accounting, Finance and Audit
Co-operative Accounting, Finance and Audit
This domain tests books of account, sources of funds, profit appropriation and the audit trail.
Records
Cash book, journal, ledger, trial balance, receipt and payment account, income and expenditure account, balance sheet, member/share registers, stock register, minutes book and loan ledger.
Finance
Share capital, reserves, deposits, borrowing from DCCB/StCB/NABARD, grants and subsidy. Working capital must match the society’s operations; excessive dependence on deposits or borrowings creates liquidity risk.
Audit
Statutory audit is conducted under the Act by the Registrar’s auditors or approved auditors. It checks legality, accuracy, financial propriety and compliance with by-laws. Audit classification or grading signals weaknesses. Internal audit and annual stock verification support, but do not replace, statutory audit.
Worked example
Net profit is ₹2,00,000. The by-laws require 25% to the reserve fund and 5% to the co-operative education fund. Dividend is capped at 10% on share capital of ₹5,00,000. Reserve = ₹50,000; education fund = ₹10,000; dividend = ₹50,000; balance ₹90,000 is used for patronage or general reserve as approved. Reasoning: statutory and by-law appropriations come before dividend; dividend is on capital, not on profit.
Traps
Audit is not investigation. Profit is not the same as cash in hand. Do not pay dividend before reserve and statutory transfers. Do not treat a subsidy as share capital.