CCONPO Requests to Comments on Draft Checklist for Audit of Societies.
February, 13th 2013
CHECKLIST FOR AUDIT OF SOCIETIES
PART A ADMINISTRATIVE
1 Whether previous audit paras are actually resolved in full
or not ?
2 Does the society have a copy of Societies Act, Rules and
(a) Whether rules and regulations are changed without
(b) Whether changes in rules and regulations suggested by
co-operative department from time to time are
incorporated or not ?
3 Whether working of the society is as per the rules and
regulations. If not then give the details.
4 Name of the union under which society is registered as a
If not, then give reasons
5 Has application from the new members been taken ?
Whether the Management Committee has approved said
Has name of new members been entered in the members
Whether new members have been entered as per the
6 Whether the expulsion of any member is as per the rules
and regulations and details of which are entered in the
7 Whether share certificates are issued to all the members
and tallied the same with the register.
8 Is society's Annual General Meeting (AGM) held ?
a) If yes, whether it was conducted as per the rules ?
b) Date of AGM
9 Number of Management Committee meetings held during
the audit period.
Whether members of committee have attended meeting
Whether committee has undertaken steps to expel
members who have not attended 3 consecutive meetings
10 Is there any amount to be recovered from the members of
the management committee ?
If yes, unpaid since which period and what amount ?
Whether any action is taken by the society against such
11 Has management committee passed any resolution
against rules and regulations ? If yes, extent of
12 Are there any dues from staff to the society ?
If yes, give the details of over dues.
Details of steps taken by the society.
13 Has society made any provision for Provident Fund for its
Whether amount of Provident Fund is kept separately
from other investments ?
14 Has the management committee fixed the responsibility
and limit of cash and stock of materials by way of
If yes, whether proper guarantee has been taken or not ?
Have letters of guarantee been kept in proper custody ?
15 (a) Give the date and amount of physical verification
Whether it tallies with the book balance ?
Report deficiency, if any.
(b) Verify material and coupon stock.
Whether it tallies with the book balance ?
Report deficiency, if any
(c) Whether society has taken insurance policy for
cash balance and stock ?
(d) Is cash maintained in effective joint custody of two
or more officials ?
(e) Have the cash balances at the society been
checked at periodic intervals and the same has
been properly documented ?
16 Whether society maintains the books of accounts and
administrative records as per the rules and regulations ?
Report the books or records not maintained (with
17 Whether administrative expenses of society are in
proportion to the activity undertaken by it ?
Report percentage of administrative expenses to its
working capital fund.
18 Has society taken loans or advances in contravention of
rules and regulations ?
19 Has society taken any loan or share capital contribution
from Government ?
If yes, specify the purpose and amount.
Whether the loan is utilized for the specified purpose ?
20 Has society received any government subsidy ?
If yes, whether the same is used for the specified purpose
21 Give the details of amount of share capital returned and
number of members to whom such capital is returned
during the year.
Whether shares returned are as per the rules and
Give the reasons for shares returned.
22 What is the net profit during the year ?
Whether the distribution of net profit is as per the rules
and regulations ?
23 Whether depreciation is calculated on dead stock and
fixed assets as per rules and regulations ?
24 Whether fixed assets register is maintained ?
25 Whether confirmation of balances are obtained from
26 Give the total amount of Society's debts out of which
a) Bad debt
Whether any provision has been made for such debt ?
Steps taken to recover the same.
27 Whether balances in accounts of society are tallied with
those as per the bank, Union and other parties ?
28 In case any books of account are maintained manually,
does general scrutiny thereof indicate whether they have
been properly maintained with balances duly inked out
and authenticated by the authorized signatories ?
29 In respect of society, having computerized accounts
Whether hard copies of accounts are printed regularly ?
Indicate the extent of computerization and the areas of
Whether regular back-ups of accounts and off-site
storage are maintained ?
Whether adequate contingency and disaster recovery
plans are in place for loss / encryption of data ?
Do you have any suggestions for the improvement in the
system with regard to computerized operations of the
30 Have you found any permanent or temporary irregularity
in financial or administrative matter during the course of
audit ? If yes in which quarter.
PART B BUSINESS
1 Whether society sends the collected milk to the union or
disposes otherwise ?
2 Whether dairy register is approved by the committee after
its completion ?
3 What is the normal difference between the test conducted
by the society and test reported by the union in quality of
4 What is the excess quantity of milk reported by the union
while receiving milk from the society as compared to the
quantity dispatched by the society ?
If such excess is lower than three percentages, give the
5 What is the normal time for making payment to milk
Please report the flaw, if any, in the payment system.
6 What system is adopted for local milk sale ?
Report the defects, if any, in the system.
7 What is the system for the sample milk sale ?
Is the system satisfactory ?
8 What is the system of disposal of surplus stock of milk ?
(surplus stock = Quantity of milk procured.
Less : Local sales.
Less : Quantity of milk sent to union)
Is the system of disposal reasonable ?
Report, if prejudicial to the interest of the society.
9 What is the normal profit margin in sales purchase
transactions of milk ?
Whether trading profit derived after making payment to
the members of the society and after receiving the rate
difference is reasonable ? If not, give the reasons.
10 Give the reasons, if there is any delay in payment of rate
difference, bonus and dividend to the members of the
11 Whether society has carried out dealings in other
Whether such transactions are as per the rules ?
Whether such dealings are in benefit of the society ? If
not give the reasons.
12 Have loans been given to milk suppliers ?
Whether credit appraisal is verified ?
Has adequate security been taken ?
13 Have insurance policies been taken for members'
Please report under whose name policies have been
14 Are there any technical defects in administration and
operations of the society ? If yes, report
PART C FINANCE AUDIT
1 Are there any unpaid dues from employee to the Union ?
If yes, give the details of overdue
Details of steps taken by the Union
2 Has Union set up staff provident fund, gratuity fund and
superannuation fund for its employees ?
Have rules been accepted for such fund ?
Whether amount of contribution is kept separately ?
If separate fund is established, give the details
3 Has adequate guarantee been taken from employees
handling cash and inventory ?
Is guarantee in proper custody ?
Whether the same has been timely invoked in case
4 Does the Union hold adequate insurance cover for
building, plant & machinery, vehicles, stock, chilling
centre, livestock and cash on hand ?
Is policy being renewed regularly ?
5 Whether union has prepared budget and the same has
been approved in the AGM ?
Is there material variance between actual income and
expenses with budgeted income and expenses ?
Whether revised budget, if any, is approved ?
6 Is cash maintained in effective joint custody of two
Has committee passed resolution for nominating officials
for custody of the cash ? If yes, provide resolution No.
and its date.
Has any limit been fixed for keeping cash on hand ?
Whether cash on hand is kept in excess of the limit for a
long time ?
If yes, obtain the explanation from the Management
7 Whether physical verification of cash was carried out ?
Whether the same was tallied with cashbook ? Put a sign
in the cash book and give the details of the officers of the
union remain present.
8(a) Has union taken borrowing or deposits ?
Give the interest rate on deposits. Whether interest rate is
higher than bank rate ? If yes, give reasons.
8 (b) Has union borrowed money from the government or other
agency ? If yes, give the amount of borrowing and
Has borrowed fund been used for the purpose for which it
was taken ?
Has required agreement been executed ?
Have terms of the borrowing been complied ?
Whether instalments are regularly paid ?
8 (c) Has union received subsidy from the government or other
Has subsidy been used for the purpose for which it was
received ? If not, obtain explanation.
9 Whether Union has invested securities of other entities ?
Whether investment register has been maintained ?
Whether the same tallies with the General Ledger ?
Whether dividend / interest on the investment has been
received and properly credited ?
10 What is the profit / loss of the union in last Accounting
Has Profit & Loss Account been prepared as per rules
and regulation ? Give deficiency if any.
Has approval of general meeting been obtained for
distribution of profit ?
Whether distribution of profit is as per the rules and
1) Reserve Fund
2) Education Fund
11 Give the dividend rate declared by the union
Whether General Meeting has increased dividend rate
recommended by the Management Committee ? If yes,
whether it was as per the rules ?
12 System of Accounts & Financial Control
1. Whether the duties and responsibilities including the
delegation of powers at various levels of management
have been adequately defined ?
2. Examine the systems of accounts and financial control
being followed by the union and give your views as
regards their deficiencies alongwith suggestions for
3. Have you noticed any weaknesses in the internal control
system ? If yes, the same may be highlighted.
4. State whether the management has taken remedial action
on remarks in last 3 years Auditor's report ?
5. Whether the union has a clear credit policy for providing
for doubtful debts / write offs ?
6. Please report whether the system of giving discount to
promote sales is fair ? Whether the instructions for
allowing discount are issued in writing and communicated
properly to sales outlets.
7. Examine and indicate whether the union has a system of
monitoring the timely recovery of outstanding dues ?
Highlight the significant instances of failure of the system,
8. Whether confirmation of balances from debtors are
9. Examine and comment upon the reasonableness of
assumptions made by the Actuary in providing for
retirement benefits in the form of gratuity, leave
encashment, etc as per Accounting Standard-15
prescribed by the Institute of Chartered Accountants of
13 Assets (including inventory)
1 Whether fixed assets register is maintained properly ?
2 Whether capitalization of assets done on due dates ?
3 Examine and comment on the system of valuation of fixed
4 Does the work in progress contain any item, which has
remained unadjusted, for an unduly long time ? Attach list
of such items indicating amount, period of pendency and
5 Whether the system made for the purposes of control
over inventory, including stocktaking and valuation of
inventory at the end of financial year are adequate and
duly enforced ?
6 Examine and comment on the system of physical
verification, valuation, treatment of non-moving and slow
moving items, their disposal and abnormal excess and
shortages in respect of closing stock items.
7 List out the surplus / obsolete/non-moving items of stores,
raw material, finished goods lying unused at the end of
last 3 years.
8 Examine whether the union has prescribed the following
with regard to management of inventory ?
a) Maximum and minimum limits of stores and
b) Economic order quantity for procurement of
9 Whether proper records are maintained for inventories
lying with third parties and assets received as gift from
government or other authorities.
1 Whether cost records is maintained ?
2 Are the cost accounts being reconciled with financial
3 Whether the union has an effective system for
identification of idle labour hours and idle machine
4 Examine the accounting treatment of rejections and
scraps for determination of cost of production.
15 Internal Audit
1 Whether union is having internal audit system ?
2 Whether internal audit manual / guidelines have been
prescribed and whether the same are being followed ?
3 Give your comments on the internal audit system stating
whether its reporting status, scope of work, level of
competence, etc. are adequate ? If not, describe the
4 Is there an adequate compliance mechanism on internal
audit observations ?
16 EDP Audit
1 Whether the organization has an approved IT strategy or
2 If the union has computerized its operations or part of it,
assess and report, how much of the data in the union is in
electronic format, which of the major areas such as
Financial Accounting, Sales Accounting, Personnel
Information, Payroll, Materials / Inventory Management,
etc. have been computerized.
3 Indicate how this impacts on your work of auditing the
Accounts and whether your audit is through or around the
4 Has be union evolved proper security policy for Software /
5 Identify the areas in which the auditor is of the view that
the built-in checks in the computer environment need to
be reviewed. Also mention the percentage of acceptable
audit risk in those identified areas.
6 Report on the existence of a system of proper
documentation of software programs
7 Whether adequate contingency and disaster recovery
plants are in place for loss of data ?