Government Norms Tighten Audit Noose Around Cooperative Bodies
August, 25th 2014
With Cooperative bodies evading audit of their accounts for several years, the State Government has effected a change in Odisha Cooperative Societies Rules to make them fall in line.
The amended rules necessitate that the cooperative bodies must get their performance audited by an approved professional firm or an auditor within a month of the end of each Cooperative Year.
As per the new rules, every society shall prepare the statement of accounts required for audit and place it before the auditing firm after signing the balance-sheet and profit and loss accounts.
Although Odisha Cooperative Societies Act necessitated audit of the societies, it was primarily carried out by auditors of the State Government. While a serious shortage of auditors marred the account investigation process, many societies took advantage of the situation to evade attention.
When the chit fund scam surfaced last year, many fraud firms were found to be functioning under the guise of cooperatives, carrying out their unlawful operations. With the auditing system not fool-proof, these societies flourished. However, the new clauses are aimed at giving independence to the cooperative bodies in carrying out the audits while making them accountable. “These clauses have been incorporated for the first time so that auditing can be done by professional firms. It also gives the cooperative societies autonomy in the matter but the objective is to ensure that the accounts of these bodies are audited regularly because it was not the case earlier,” Commissioner-cum-Secretary Bishnupada Sethi said.
The auditors or the auditing firms will be chosen by the societies from a panel approved by the Government or any other authority on its behalf. The new rules also mandate the apex societies to furnish the audit reports to the Government within two weeks so that compliance can be met.
However, concerns remain since compliance to the audits has remained a grey area for the cooperative bodies. While the rate of audit of the cooperative bodies is very low, particularly for the primary societies, in case of bigger institutions, compliance to the errors and deficiencies pointed out by the auditors is dismal.
A case in the point was the action against eight officials of Odisha State Cooperative Bank (OSCB) who faced the music for their involvement in financial frauds. They were allegedly involved in a financial fraud to the tune of `70 crore during last five years but evaded action. After a probe by Economic Offences Wing and State Vigilance, six were dismissed by Sethi and two were demoted.