Audit - Housing Society
A housing society audit is an examination of the financial records and transactions of a housing society, which is a type of cooperative society formed by individuals who own or occupy residential units in a building or complex. The objective of the audit is to provide an independent assessment of the society’s financial health and compliance with legal and regulatory requirements.
The audit is typically conducted by a chartered accountant or a firm of chartered accountants appointed by the society’s governing body or members. The auditor reviews the society’s financial statements, which include its balance sheet, income statement, and cash flow statement, as well as supporting documents such as invoices, receipts, and bank statements.
During the audit, the auditor checks for any discrepancies or irregularities in the society’s financial records, such as errors in accounting, misappropriation of funds, or non-compliance with tax laws. The auditor also verifies the society’s compliance with legal and regulatory requirements, such as the Maharashtra Cooperative Societies Act and Rules, as well as any other applicable laws or regulations.
Once the audit is complete, the auditor issues a report that includes an opinion on the fairness and accuracy of the society’s financial statements, as well as any findings or recommendations for improvement. The report is shared with the society’s governing body and members, who may use it to make decisions about the society’s financial management and future plans.
Overall, a housing society audit is an important process that helps ensure the financial transparency and accountability of the society. It provides assurance to the members that their contributions are being used appropriately and in accordance with the society’s objectives, and helps maintain the integrity and credibility of the society in the eyes of stakeholders and regulatory authorities.
As per the Maharashtra Cooperative Societies Act, 1960 and the Maharashtra Cooperative Societies Rules, 1961, the eligibility criteria for conducting a housing society audit in Maharashtra are as follows:
The auditor must be a practicing Chartered Accountant or a firm of Chartered Accountants registered with the Institute of Chartered Accountants of India.
The auditor must have a valid certificate of practice issued by the Institute of Chartered Accountants of India.
The auditor must not be a member of the society’s governing body, an employee of the society, or a relative of any member of the governing body or employee of the society.
The auditor must not have any financial interest in the society, either directly or indirectly.
The auditor must be independent and impartial in carrying out the audit, and must not have any conflict of interest with the society or any of its members.
It is important to note that these eligibility criteria are applicable for all types of cooperative societies, including housing societies, in Maharashtra. By adhering to these criteria, the housing society can ensure that the audit is conducted by a qualified and impartial professional, who can provide a fair and accurate assessment of the society’s financial health and compliance with legal and regulatory requirements.
Format – Resolution passed at Annual General Meeting – Appointment of Housing society auditor.
A resolution to appoint an auditor for a housing society can be drafted and passed at the Annual General Meeting (AGM) of the society. Here’s an example of such a resolution:
“RESOLVED THAT M/s ABC & Co., Chartered Accountants, / Cost Accountants /Certified Cooperative Auditors having its office at [address], be and is hereby appointed as the Statutory Auditor of the society for the financial year [year], to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting at which the audited financial statements for the year [year] will be presented.
FURTHER RESOLVED THAT the Board of Directors is authorized to fix the remuneration payable to the auditor for conducting the audit, subject to the approval of the Registrar of Cooperative Societies.”
This resolution acknowledges the appointment of a specific auditor for the upcoming financial year and authorizes the governing body of the society to negotiate and approve the auditor’s remuneration. This resolution should be proposed, seconded, and passed by a majority vote of the members present at the AGM. Once passed, the auditor can proceed with conducting the audit of the society’s financial statements.
What’s an Audit Classification of the housing Society in Maharashtra ?
In Maharashtra, housing societies are classified into three categories for the purpose of audit, based on their annual turnover and the number of members. The classification and corresponding audit requirements are as follows:
Class A: Housing societies with an annual turnover of more than Rs. 100 crores or having more than 500 members. Class A societies are required to conduct a statutory audit by a panel of auditors appointed by the Registrar of Cooperative Societies.
Class B: Housing societies with an annual turnover of more than Rs. 20 lakhs but less than Rs. 100 crores, or having more than 200 members but less than 500 members. Class B societies are required to conduct a statutory audit by a Chartered Accountant or a firm of Chartered Accountants appointed by the society’s governing body.
Class C: Housing societies with an annual turnover of up to Rs. 20 lakhs or having up to 200 members. Class C societies are not required to conduct a statutory audit but must maintain proper books of accounts and prepare financial statements for submission to the Registrar of Cooperative Societies.
It is important for housing societies to comply with the applicable audit requirements, as failure to do so can result in penalties and legal action. Conducting a timely and accurate audit can also help housing societies maintain transparency and accountability, as well as identify areas for improvement in their financial management and operations.
The fees for a Housing Society Auditor in Maharashtra can vary depending on various factors such as the size of the society, the complexity of its financial statements, and the scope of the audit. However, the fees charged by the auditor must be reasonable and should not exceed the limits prescribed by the Registrar of Cooperative Societies.
As per the Maharashtra Cooperative Societies Rules, 1961, the fees payable to a housing society auditor shall be fixed by the society’s governing body subject to the approval of the Registrar of Cooperative Societies. The fees must be reasonable and commensurate with the services rendered by the auditor.
Within the
- Corporation area and cantonment areas, Rs.36/- per member
- Municipal Towns – Rs.24 per member
- Village/Panchayat level – Rs.12 per member
In practice, the fees charged by auditors for a housing society audit in Maharashtra can range from a few thousand rupees to several lakhs of rupees, depending on the complexity of the audit and the size of the society. The fees are generally payable by the society’s governing body from the society’s funds.
It is important for housing societies to negotiate and agree upon reasonable fees with the auditor in advance of the audit, in order to avoid any disputes or misunderstandings later on. By ensuring that the fees charged are reasonable and justifiable, housing societies can ensure that they receive high-quality audit services while maintaining financial prudence and transparency.