Auditors observations regarding the mess in our society functioning

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July 20, 2019

The Dy. Registrar of co-opertaive Societies,
Thane City,

Dear Sir,

This has reference to the hearing fixed by you for Saket CHS Ltd., on Tuesday, July 30, 2019 at 11.00 am.

I am forwarding to you a mail written by me to our society members regarding the adverse remarks made by our Statutory Auditors against the functioning of the society in the AGM held in September 2017.

This is for your information.

Following are our Statutory Auditors remarks about the functioning of the society made in the AGM:

1)            He had given a qualified report which is a completely negative report, and he had given such a scathing report for the first time to any society – only because he had found gross violations of the byelaws and the Act by the society.
2)            He did not get / find any proper records or books of accounts in the society.
3)            He informed that his audit was delayed beyond July 31st, 2017 because he did not get any information from the society on time and could start his audit only in September.
4)            He said that there is no Opening Balances available to him to start his work and the society had not got and done the Bank reconciliation required.
5)            He stated that the society has not properly maintained the minutes of the previous AGM and Managing committee meetings.
6)            He informed that the method of rotation of office bearers was wrong and it should have been done with consent of the Election Officer, as is mandatory by the State Election Authority.
7)            He further informed that though the society had adopted the new byelaws last year, the same had become infructuous as they were not submitted to the Registrar and an order obtained within 2 month of passing them, as is required by the byelaws.
8)            He then informed that his Special Report was a serious thing exposing faults in the functioning of the society. However, these faults can be rectified in 3 months from the date of the Audit Report, as per provisions of the MCS Act by submitting an Audit Rectification Report.
9)            He underlined the importance of maintaining records properly, because as per the MCS Act, societies have to keep records permanently.
10)            He then pointed out the serious lacunae’s in the functioning of the society.
11)          The write off of Rs. 7 lakhs without any supporting was incorrect.
12)          Spending of Rs. 46 lakhs without sanctions and approvals of the General Body and Managing Committee meetings was a total violation of all laws, byelaws and the MCS act.
13)          He stated that he has pointed out 13 points to be rectified by the society in a systematic manner, in his A/B/C phased Audit Report.
14)          He mentioned that the Tally balances and Manual books are not matching. So accordingly there was difference in the members account. This needs to be rectified.
15)          Proper Inwards & outward register should be maintained for assets and they should be checked periodically.
16)          The FD investments and their classification has to match with the Funds Register.
17)          Society should have its own IT return login ID, which is missing. Income Tax returns and other mandatory returns are not filed properly. The society had hired a tax professional to file the returns paying a huge fee, but, then too, income tax department has levied huge penalty with interest.
18)          Society committee members should study and amend the Bye-Law for repairs and maintenance related expenses.
19)          As per model Bye-Law each share capital should be of Rs.10/- for every member. A separate sub-committee should be formed to distribute the share certificate and verify the documentation.
20)          The Co-operative Act should be scrupulously followed by the society. We have to conduct cooperative educational seminars for the society to work properly. Educational training is compulsory for society member as per the MCS act..
21)          GST is applicable for society @18% on liability & 24% will be interest on liability if there is a delay. Society should start the process of getting the GST as early as possible from the professional firm.
22)          In case of any breaches regarding submission of mandatory documents by society, the Committee can be dismissed by the Registrar and such dismissed members shall not be able to contest elections for a period of 6 years anywhere in Maharashtra.
Excellent Work..???
 
 
Dayanand J. Nene
[Political Activist and Analyst]
Bharatiya Janata Party
Consumer Protection Service Council
Alert Citizens Forum of India
88795 28575 / 90040 28575

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