Question 1

As a member, which society records and accounts can I inspect, and can I get copies?

Accepted Answer

Free inspection, at the society office in office hours or at a time the society fixes, of the Act, Rules and bye-laws, the last audited balance sheet and income and expenditure account, the list of committee members, the register of members, minutes of general and committee meetings, and the entries of your own dealings with the society. Copies of these must be supplied on written request after you pay the prescribed fee. Section 32(1) gives every member that inspection right and s.32(2) obliges the society to furnish copies within one month of payment of the fee. The 2014 bye-laws add the audit report and approved bye-laws (BL 23) and fix copying fees — e.g. ₹10 per page for the audited balance sheet and for minutes (BL 170). For housing societies Chapter XIII-B restates the right (s.154B-8); the draft 2026 bye-laws let the general body fix a monthly inspection day, require the Secretary to fix a date within 15 days of a written request, quote fees within 7 days, supply copies within 45 days of payment, keep a register of inspections and copy requests, and supply digital copies free; they also bar disclosure of other people's Aadhaar, PAN, bank or other protected personal data (dBL 37-39). Vouchers, bills and contracts are not in the s.32(1) list itself; members usually see them through the audit report, the AGM, or a general-body resolution allowing inspection. Refusal to supply copies is a matter for the Registrar (2014 annexure, "non supply of the copies of record and documents").

Question 2

By when must the society close its accounts each year?

Accepted Answer

The co-operative year runs 1 April to 31 March. The committee must finalise the year's receipts and payments, income and expenditure account and balance sheet (Form N) with schedules within 45 days, i.e. by about 15 May. BL 145(a) requires the Secretary or an authorised person to finalise the preceding year's accounts within 45 days of its close, in the forms prescribed under Rule 62, with the list of members and their share capital, and schedules of investments, debtors, creditors and fixed assets. The draft 2026 bye-laws keep the 45 days, open the statements to members' inspection, require them to reach the auditor within 15 days of preparation and the books within 60 days of year-end (dBL 141(1)-(3)). The committee stays responsible even if an accountant or software provider keeps the books (dBL 140(4)). Late preparation of annual accounts is a Registrar matter under the 2014 annexure.

Question 3

When must the statutory audit be completed, and can the AGM be held without audited accounts?

Accepted Answer

The audit must be completed before notice of the AGM is issued, and the AGM must be held by 30 September. The Act as published by the Co-operation Department says within six months of the year's close; the draft 2026 bye-laws bring this forward to 31 July. An AGM that cannot consider audited accounts fails its main statutory business. Section 81(1)(a), in the text on the Co-operation Department's site, requires every society to have its accounts audited at least once a year, completed "within a period of six months from the close of financial year … and in any case before issuance of notice of the holding of annual general body meeting", and laid before the AGM; s.81(1)(c) makes the committee responsible for getting the statements audited in time. BL 150(b) says the same. The draft 2026 bye-laws require the auditor to complete the audit and report to the society and Registrar within four months, by 31 July, and the audited statements to be displayed 14 days before the AGM (dBL 141(4)-(5)). The AGM itself is due by 30 September (s.75(1); BL 93), and considering the audit report is on its mandatory agenda (BL 94(c)). If the society fails to file the auditor-appointment return, the Registrar may appoint an auditor himself (s.81(1)(a) proviso). Non-audit is a Registrar matter; members can complain to the Deputy/Assistant Registrar.

Question 4

Who appoints the statutory auditor, can the same auditor continue every year, and who fixes the fee?

Accepted Answer

The AGM appoints the auditor from the panel approved by the State Government and fixes the fee. Under the 2014 bye-laws the same auditor may not be appointed for more than two consecutive years. The society must tell the Registrar the auditor's name and written consent within one month of the AGM. Section 81(1)(a) requires the auditor or auditing firm to be from the Registrar's panel and appointed by the general body (s.75(2A)); s.81(1)(f) makes the remuneration the society's, at the rate fixed by the general body; a panel auditor may not take more than 20 society audits a year (excluding societies with paid-up capital under ₹1 lakh). BL 150(a),(c) repeat this and bar more than two consecutive years; BL 94(f) puts the appointment on the AGM agenda. The return under s.79(1B) — auditor's name and consent — is due within one month of the AGM (BL 145(b)(viii)); if it is not filed, the Registrar may appoint an auditor. An internal auditor is optional (BL 150(d)). Audit fees are a service charge shared equally (BL 65(i)).

Question 5

What is the society's "audit class" (A, B, C, D) and what does a poor class mean?

Accepted Answer

At the end of each statutory audit the auditor gives the society an audit classification letter under the Registrar's instructions. A lower class signals poor record-keeping, recoveries or compliance; it is a warning to members and it can limit what the society may do without extra approvals. Rule 69(9) requires the auditor to award an audit classification letter in accordance with the Registrar's instructions, and the Registrar's published list of societies shows each society's audit class. The marking criteria are set by the Registrar's circulars, not by the Act or bye-laws. Class matters in practice: under the 2014 bye-laws a society classed A or B at the last audit may write off irrecoverable dues against a Bad Debt Fund without the Registrar's or financier's permission (BL 149 proviso), and the draft 2026 bye-laws let societies deposit only in co-operative banks that have held class "A" for three consecutive years (dBL 20(a)(i)). Members should read the audit memorandum's reasons and the rectification report (accounts_audit-006).

Question 6

The auditor has raised objections. What is the committee required to do, and by when?

Accepted Answer

Within three months of the audit report the society must explain the defects to the Registrar, rectify them and report the action taken — the Audit Rectification Report in Form O — and place it before the AGM. It keeps filing further reports until the Registrar is satisfied. Failure makes every committee member liable to penalty. Section 82 requires the society, within three months from the date of the audit report, to explain the defects or irregularities, take steps to rectify them and report the action taken to the Registrar, who may also order specific remedial action. Rule 73 prescribes Form O and requires further reports until all defects are rectified. Under BL 152 the Secretary drafts the Form O report and places it before the next committee meeting; the committee approves it, completes rectification within three months and submits it to the Registrar and the AGM; failure is deemed an offence under s.146 with penalty under s.147. The AGM agenda includes receiving the rectification report and action taken (BL 94(d); dBL 95(c)(v)). The Audit Rectification Register in Form O is a statutory register (BL 140), and committee members and accounts officers are jointly and severally responsible (dBL 143(e)).

Question 7

What must be placed before the AGM for approval on accounts and finance?

Accepted Answer

The committee's annual report with the Form N accounts, the statutory audit report, the audit rectification report and action taken, the budget for the next year, appointment of the auditor, and the annual return. The draft 2026 bye-laws add the plan for disposal of surplus, loans to members and bye-law amendments. BL 94 lists the AGM's business: minutes of the last AGM/SGM and action taken; the annual report with Form N statements (income and expenditure and balance sheet); the audit report; the rectification report and action taken; the annual budget; appointment of a panel auditor; the annual return under s.75(2) and s.79; matters needing GB sanction (such as fund utilisation and investments); communications from the Registrar, auditor and authorities; the election date when due. Rule 69(7) requires the summary of the audit memorandum to be read out in a general meeting. The draft 2026 list (dBL 95(c)) adds the surplus-disposal plan, details of loans to members or specified persons and bye-law amendments. The auditor is entitled to notice of the AGM and to be heard (s.81(5) in the bare-act text). Members who want an item discussed should give it in writing well before the notice goes out; business requiring notice cannot be added at the meeting.

Question 8

What annual returns must the society file with the Registrar, and what happens if they are not filed?

Accepted Answer

By 30 September: the annual report, audited accounts, surplus-disposal plan approved by the GB, bye-law amendments, a declaration of the AGM date and election status, and anything else the Registrar requires — uploaded on the MahaSahakar portal. Within a month of the AGM: the auditor's name and consent. Non-filing is an offence with a penalty. Section 79(1A) lists the annual return items; BL 145(b) repeats them and adds the list of members; s.79(1B) requires the auditor-appointment return within one month of the AGM (BL 145(b)(viii)). The Co-operation Department treats a return not uploaded online as not filed; action lies under ss.146-147 (penalty up to ₹5,000 is the figure in the department's circular as summarised in 01-regulatory-landscape.md). If the auditor return is not filed, the Registrar may have the accounts audited by a panel auditor (s.81(1)(a) proviso; BL 145(b)(ix)).

Question 9

Our society has not had its accounts audited for years and the committee will not show the books. What can members do?

Accepted Answer

Complain in writing to the Deputy or Assistant Registrar of Co-operative Societies with proof of your requests. The Registrar can have the accounts audited by a panel auditor, order a special audit or re-audit, and on an application by one-third of members must hold an inquiry. Non-audit, non-preparation of accounts, non-supply of copies and failure to hold the AGM are listed as Registrar matters in the 2014 bye-laws' annexure. The Registrar may cause accounts to be audited where the society has not filed its returns (s.81(1)(a) proviso), may audit any society's accounts "of any year and at any time" for recorded reasons and order re-audit (s.81 as in the bare-act text), and must hold an inquiry into the society's working on the application of one-third of members (s.83), with costs recoverable from those responsible (s.85). Where money is found misapplied, the Registrar can assess and recover it from the persons liable (s.88; Rule 72). A committee that fails to hold the AGM or get accounts audited also risks disqualification (s.75(5); BL 93(b)). Start with a written request to the Secretary citing s.32 and the bye-laws, then escalate. For money claims or disputes about resolutions, the Co-operative Court (s.91) is the forum; consult an advocate.

Question 10

Can the society write off maintenance arrears that can never be recovered?

Accepted Answer

Only after all recovery steps, a certificate from the statutory auditor that the amount is irrecoverable, the committee's recorded reasons and a general-body resolution — and, in some cases, the approval of the financing agency and the Registrar. A write-off is an accounting entry; it does not cancel the right to recover later. BL 148-149 allow write-off of charges, recovery costs and accumulated losses certified as irrecoverable by the statutory auditor, with GB sanction, the financier's approval if the society owes it money, and the Registrar's approval — except that a society classed A or B at the last audit needs neither the bank's nor the Registrar's approval if a Bad Debt Fund covers the amount. The draft 2026 bye-laws require all reasonable recovery steps first (see defaulters_recovery), detailed reasons, a GB resolution, a Register of Written-off Dues and state that the write-off does not extinguish the society's legal right (dBL 144-145).

Question 11

Can the committee collect maintenance without issuing bills or receipts, or keep large amounts in cash?

Accepted Answer

No. The Secretary must issue a bill or demand notice to every member for the charges, receipts must be kept, cash in hand is limited to ₹5,000 with the excess banked within three days, and payments above ₹1,500 must be by crossed account-payee cheque (or bank transfer). BL 68 requires the Secretary to prepare and issue the bill/demand notice to all members by the date the committee fixes; interest can only run after the due date in that bill (BL 69-70; since June 2026 capped at 12 % simple, Rule 106C-12(4) item 6). Cash and payment discipline is in BL 143-144; bill and receipt counterfoils are mandatory files (BL 141). The draft 2026 bye-laws require a Bills Register, Collection Register and Receipt Books, and supporting vouchers for every transaction (dBL 140).

Question 12

Is the society required to prepare and approve an annual budget?

Accepted Answer

Yes. The committee prepares the annual budget and places it before the AGM for the next financial year; the June 2026 Rules list budget preparation among the committee's duties. Rule 106C-13(2)(a) requires the committee to prepare the annual budget and maintain financial records; BL 94(e) and dBL 95(c)(vi) put the budget on the AGM agenda. The budget is the basis on which the committee fixes each member's charges (BL 66); a mid-year increase in charges not covered by the budget should go to a general body. Budget versus actual is a useful schedule to attach to the annual report.

Question 13

Why does the Receipts and Payments account show a different figure from the Income and Expenditure account for the same year?

Accepted Answer

They measure different things. Receipts and Payments lists all money that came into or went out of the bank and cash during the year, whatever it was for. Income and Expenditure shows only what was earned and spent for that year, whether or not the cash has moved yet. Rule 61 requires three annual statements: receipts and disbursements, the profit and loss (for a housing society, income and expenditure) account, and the balance sheet. BL 145(a) and dBL 141(1) repeat this. Typical reasons the two figures differ: (1) Arrears of earlier years collected this year are receipts, but not this year's income. (2) This year's bills still unpaid at 31 March are income, but not receipts. (3) Contributions to the sinking fund and repairs fund, deposits, share money and loans are receipts that go to funds or liabilities, not to income. (4) Buying a pump or a fixed deposit is a payment, but not an expense of the year. (5) Bills payable at 31 March, such as the last month's electricity, are expenses, not yet payments. Read the two together with the balance sheet: members' arrears, outstanding expenses and fund balances explain the gap. Ask the treasurer for a short reconciliation if it is not obvious.

Question 14

Should a housing society keep its books on a cash basis or an accrual basis?

Accepted Answer

Keep them on an accrual basis. The law asks for an income and expenditure account and a balance sheet, which only make sense if bills raised are income when due and bills received are expenses when incurred. Cash movements are shown separately in Receipts and Payments. Neither the Act nor the bye-laws uses the word "accrual". But Rule 61 and Form N (Rule 62) require a profit and loss (income and expenditure) account and a balance sheet. dBL 144(d) and 145(b) refer to "applicable Accounting Standards", which are accrual-based. Rule 69(6)(ii) asks the auditor to list sums that ought to have been brought into account and were not. In practice this means: (1) Each month's maintenance bill is income of that month; unpaid amounts are members' arrears (an asset). (2) Expenses of March paid in April are shown as outstanding expenses at 31 March. (3) An insurance premium paid for a year that runs into the next financial year is split; the unexpired part is a prepaid expense. (4) Interest on fixed deposits is accrued up to 31 March even if credited later. A cash-only set of books usually draws an audit remark and understates arrears. Accounting software that raises bills and records receipts separately gives accrual books automatically.

Question 15

How should a housing society's chart of accounts be laid out?

Accepted Answer

Build it around the law's own lists. Funds follow Rule 106C-11. Income heads follow the charges in Rule 106C-12(1). Expense heads follow the service charges in Rule 106C-12(2). Add separate heads for members' arrears, advances, tax payable, investments and fixed assets. A layout that auditors and members can follow: (1) Members' funds and reserves: share capital; Reserve Fund (entrance fees, transfer fees and premium, s.66 appropriation, untied donations); Sinking Fund; Repairs and Maintenance Fund; Major Repair Fund; Education and Training Fund; Election Fund; Welfare Fund; Corpus Fund; any special fund the general body approves (Rule 106C-11(1)-(9)). (2) Liabilities: maintenance received in advance, deposits, TDS payable, GST payable if registered, outstanding expenses, loans. (3) Assets: fixed assets (Property Register), investments shown fund by fund, members' arrears in a member-wise personal ledger, other receivables, bank and cash. (4) Income: one head per charge in Rule 106C-12(1), plus interest, non-member income (hall hire, hoardings, tower rent) kept separate for tax. (5) Expenditure: one head per service charge in Rule 106C-12(2) (salaries, office costs, printing, travel, sitting fees, federation fees, audit fees, meeting costs, legal fees, common electricity), plus repairs, lift, water, property tax, insurance. Keeping non-member income separate makes the income-tax and GST work much easier.

Question 16

Are sinking fund and repair fund contributions the society's income for the year?

Accepted Answer

No. They are members' contributions held for a stated purpose. Credit them to the fund account, invest them, and add the interest earned to the same fund. Spend them only on what the fund is for, with general-body approval where the Rules require it. Rule 106C-11 describes each fund by what it consists of and what it may be used for. The Sinking Fund is collected at a rate fixed by the general body, at least 0.25 % a year of the architect-certified construction cost of each flat, and is used for heavy repairs as the general body approves (106C-11(2)). The Repairs and Maintenance Fund, at least 0.75 %, covers routine recurring repairs (106C-11(3)). Because these amounts are tied to a purpose, show them on the liabilities side as funds, not as income that can be spent on salaries. BL 15 (2014) requires fund money to be invested long term "along with the interest earned thereon", so the interest belongs to the fund too. Keep a Sinking Fund Register (BL 140; dBL 136) matching the fund balance with fixed deposits. When a repair is paid from a fund, debit the fund, not the expense account, and keep the general-body resolution with the voucher. If the society has shown these contributions as income in earlier years, ask the auditor how to correct it.

Question 17

How often should the treasurer prepare a bank reconciliation, and what should it show?

Accepted Answer

Every month, for every bank account. It explains the difference between the bank statement and the society's bank book: cheques issued but not cleared, deposits not yet credited, bank charges and interest not yet entered, and credits the society cannot yet identify. The auditor must verify the cash balance and securities (s.81(2)(ii)) and the draft bye-laws require a Bank Book and prompt, accurate recording backed by vouchers (dBL 140(2)-(3)). A monthly reconciliation is how the society shows this. A simple format: (1) Balance as per bank book. (2) Add cheques issued but not yet presented. (3) Less deposits made but not yet credited. (4) Adjust bank charges, SMS fees, interest credited and TDS deducted by the bank that are not yet in the books, and then enter them. (5) List unidentified credits (for example UPI payments without a flat number) and park them in a suspense account until traced. (6) The result must equal the balance as per bank statement. Items to follow up: cheques uncleared for three months (stale), repeated unidentified credits, and any debit the committee did not authorise. The chairman or another office-bearer should sign the reconciliation each month, and it should be kept with the bank statements for the auditor.

Question 18

I paid my maintenance online but the society's statement still shows it as unpaid. How should the society deal with payments it cannot match to a flat?

Accepted Answer

Send the society the transaction reference and date. The treasurer should hold unmatched credits in a suspense account, trace them from the bank statement, then credit your ledger and issue a receipt dated the day the money reached the bank. Interest should not be charged for the period the money was already with the society. Every financial transaction must be recorded promptly and supported by evidence, and the committee stays responsible for the books even when an accountant or a software provider keeps them (dBL 140(3)-(4)). A payment the bank has credited is the society's money from that date, whether or not it has been matched. Good practice for the office: (1) Put the flat number in every payment link or virtual account so matching is automatic. (2) Review the suspense account at every monthly reconciliation and clear it before the books are closed at year-end. (3) Reverse any interest charged because of a matching delay. For the member: keep the bank confirmation. If a disagreement over the amount you owe continues, it is a dispute between a member and the society, which goes to the Co-operative Court under s.91 after the committee and general body have been approached. Interest may be charged only at the rate the general body fixed, simple, not above 12 % a year (Rule 106C-12(4) item 6).

Question 19

Must the society charge depreciation on its lifts, pumps, generator and other assets?

Accepted Answer

Yes, in practice. The MCS law gives no depreciation rates, but MCS Rule 49A(1)(vi) lists depreciation among the items a society deducts in working out its net profit, and a true and fair balance sheet needs assets shown at a fair value, so auditors expect depreciation on equipment. Pick a method and rates, approve them in the committee, apply them every year and disclose them in the accounts. MCS Rule 49A(1)(vi) names depreciation among the deductions from gross profit when a society calculates its net profit. The auditor must state whether the balance sheet gives a true and fair view (s.81(5B); Rule 69(3)) and must value assets and liabilities (s.81(2)(ii)). An asset shown at its purchase price for twenty years does not do that. Points to settle with the auditor: (1) Which assets: lifts, pumps, generator, CCTV, intercom, solar plant, furniture, computers. Enter each in the Property Register or Register of Fixed Assets (BL 140; dBL 140(2)(v)). (2) The building and land: many societies do not carry them in their books at all, because the cost was paid by members to the promoter. If the society does carry them, agree a policy. (3) Rates and method: written-down value at income-tax rates, or straight-line over useful life. Consistency matters more than the choice. (4) Where an asset was bought from the sinking fund or a major repair fund, the funding is shown separately from the depreciation of the asset. Record the policy in the notes to the accounts and do not change it without reason.

Question 20

I paid six months' maintenance in advance. How is that shown in the accounts, and is my advance safe if the charges go up?

Accepted Answer

An advance is a liability of the society to you until each month's bill falls due; it is not income on the day it is received. If the general body later raises the charges, the advance covers the new bills first and you pay the difference. On accrual books (see accounts_audit-302) the society records the receipt against your personal ledger. At 31 March any part not yet used is shown on the balance sheet as "maintenance received in advance" (a liability). Each month the bill is set off against it. Why it matters: (1) The income and expenditure account then shows only the year's true income. (2) The member-wise personal ledger (dBL 140(2)(ii)) shows your credit balance, so you are not billed interest by mistake. (3) The auditor checks that advances are not mixed up with arrears. Charges are fixed by the general body and apportioned under Rule 106C-12. An advance does not lock in the old rate unless the general body resolved otherwise. If you leave the society or sell the flat, any unused advance is adjusted against your dues or refunded; ask for it to be shown on the no-dues statement.

Question 21

The audit memorandum says the accounts are true and fair "subject to" some remarks. What do such qualifications mean?

Accepted Answer

A qualification means the auditor could not fully confirm something, or found something wrong. The auditor must give the reasons and list, in schedules, transactions against the law or bye-laws, sums not brought to account, improper spending and doubtful dues. Each remark must be answered in the rectification report. Under s.81(5B) and Rule 69(3) the auditor states whether the accounts give the information required and a true and fair view. Rule 69(4) adds three questions: did the auditor get all information and explanations; were proper books kept; do the statements agree with the books. If any answer is "no" or qualified, the memorandum must give the reasons (Rule 69(5)). The schedules (Rule 69(6)) list: (1) transactions contrary to the Act, Rules or bye-laws; (2) sums that ought to have been brought into account but were not; (3) material impropriety or irregularity in spending or in collecting dues; (4) money or property that looks like a bad or doubtful debt; (5) other matters the Registrar specifies. Where fraud or misappropriation is found, the auditor must also report how it happened, the amount, and who is responsible (s.81(1)(e)(i) as amended). A summary is read out at the general meeting and members may inspect the full memorandum (Rule 69(7)). The committee answers each point in Form O (see accounts_audit-312).

Question 22

How does the auditor decide the audit class, and can the society contest a low class?

Accepted Answer

The auditor awards the class in a classification letter, following the Registrar's instructions, which score the society on its finances, recovery and compliance. The law gives no specific appeal; the society can write to the auditor and the Registrar with evidence, and should fix the causes before the next audit. Rule 69(9): on completing the statutory audit the auditor awards an audit classification letter "in accordance with the instructions issued by the Registrar from time to time", and the Registrar's list of societies shows each society's class. The criteria are in the Registrar's instructions, not in the Act or the bye-laws. In practice they weigh things such as recovery of dues, the size of arrears, whether books and registers are up to date, compliance with earlier audit objections, and whether returns and meetings were on time. Why the class matters: under the 2014 bye-laws a society classed A or B can write off irrecoverable dues from a Bad Debt Fund without outside approval (BL 149 proviso). A poor class invites closer attention from the Registrar. If the class seems wrong: ask the auditor, in writing, for the scoring; send a representation with evidence to the Deputy Registrar; and use the rectification report to show what has been fixed. There is no express appeal against a classification letter.

Question 23

What can happen to the committee if the audit objections are left unrectified?

Accepted Answer

The Registrar can order specific corrections, carry them out at the society's expense and recover the cost from the officers responsible, impose a daily sum of up to Rs 25, and prosecute. Under the 2014 bye-laws failure to submit the rectification report is deemed an offence by every committee member. The chain of powers: (1) s.82: the society must explain and rectify within three months of the audit report and report to the Registrar; the Registrar may order specific action within a set time. (2) Rule 73: the society keeps filing Form O until every defect is rectified to the Registrar's satisfaction. (3) s.87(4): if the society fails to rectify defects disclosed in audit, the Registrar may have them rectified and recover the cost from the officers who failed to do so. (4) s.79(2)-(3): where required action is not taken in time, the Registrar may act at the society's expense and, after hearing, make the responsible officers pay that expense and up to Rs 25 a day until the direction is carried out. (5) BL 152(b): if the committee fails to submit the rectification report to the Registrar and the AGM, all its members are deemed to have committed an offence under s.146, punishable under s.147. dBL 143(e) makes committee members and account officers jointly and severally responsible. Serious objections, such as losses or misappropriation, may also lead to an inquiry (s.83) and a surcharge on the persons responsible (s.88).

Question 24

Who prepares the Form O rectification report, and how should each audit objection be answered?

Accepted Answer

The secretary drafts it, the committee approves it at its next meeting after the audit report arrives, and it goes to the Registrar and the AGM. Answer every objection on its own line: what was wrong, what has been done, the date, and the document that proves it. BL 152(a): on receiving the statutory and internal audit reports the secretary prepares a draft rectification report in Form O (Rule 73) and places it before the next committee meeting. The committee rectifies within three months of the audit report and submits the report to the Registrar and to the AGM. dBL 143(b)-(d) keeps the three months and requires further reports until every objection is complied with. A usable format for each objection: (1) Audit paragraph number and the objection in brief. (2) Status: rectified / partly rectified / explained (not accepted) / recovery started. (3) Action taken and date, such as a journal entry, a register updated, money recovered or a general-body resolution. (4) Evidence attached: copy of the voucher, entry, resolution or letter. (5) What will be done about anything still open, and by when. Avoid one-word answers such as "noted". An accountant may help draft it, but the committee signs it and remains responsible. Keep the Audit Rectification Register (BL 140 item 7; dBL 140(2)(ix)) up to date so the next auditor can follow the trail.

Question 25

When can the Registrar order a re-audit of the society's accounts, and can members ask for one?

Accepted Answer

The Registrar may order a re-audit whenever it appears necessary or expedient, on the society's application "or otherwise". A group of members can therefore apply with reasons. The re-audit follows the same rules as a statutory audit. s.81(6): if it appears to the Registrar, on an application by a society or otherwise, that it is necessary or expedient to re-audit any accounts, the Registrar may order it, and the provisions on audit apply to the re-audit. Rule 69, Explanation 1, counts re-audit as a form of audit. When a re-audit request is taken seriously: the statutory audit was superficial or done by an auditor who was not eligible; records were withheld from the auditor; new evidence of irregularities has emerged; or the audit report ignores obvious defects. How members can apply: a written application to the Deputy or Assistant Registrar naming the years, the specific defects and the evidence (copies of accounts, bank statements, the audit report). Members can also ask for an inquiry under s.83; the Registrar must hold one on the application of one-third of the members. Cost: audit fees for internal, statutory, re-audit and test audit are part of service charges shared equally by flats (Rule 106C-12(2)(h), (4) item 1).

Question 26

What is a test audit or a flying-squad visit, and how should the society respond?

Accepted Answer

Both are checks the Registrar can make outside the regular audit. A test audit examines selected items of any society's accounts. A flying squad can arrive to examine books and count cash, and its report counts as an audit report. Give full access and keep a record of what was inspected. s.81(3)(b): the Registrar may send a Flying Squad to examine books, records and accounts and verify the cash balance; its report is deemed an audit report for further action. s.81(3)(c): the Registrar or an authorised person may carry out a test audit covering items that are prescribed. s.81(3)(a) and (4): the Registrar's officers have access to all books, papers, cash and property at all times, and present and past officers, employees and members must give the information asked for. Practical steps: keep cash within the limit (BL 143: Rs 5,000 overnight) and the cash book written up daily; keep the bank reconciliation current; produce registers on request and ask for a written list of documents taken, with a receipt. Record the visit in the committee minutes and answer any report the same way as audit objections (accounts_audit-312). Fees for a test audit are part of service charges (Rule 106C-12(2)(h)).

Question 27

Does our society need an internal auditor, and what should an internal audit cover?

Accepted Answer

It is optional. The general body may appoint an internal auditor if it thinks it necessary. For a larger society it is worth it: a quarterly check of bills, receipts, payments, arrears and tax deductions catches problems months before the statutory audit. BL 150(d) (2014): the society may, if it considers it necessary, appoint an internal auditor at the AGM. BL 151 requires the secretary to produce all books to the internal auditor. The draft 2026 bye-laws list "Appointment of Internal Auditor, if required, and fixation of remuneration" in the first general meeting's business. The fee is a service charge (Rule 106C-12(2)(h)). Internal audit reports are also answered by rectification: BL 152(a) asks the secretary to prepare rectification reports on objections raised by both the statutory and internal auditors, and BL 141 keeps a file of internal audit reports and their rectification. A useful internal-audit scope: (1) billing matches general-body rates and the Rule 106C-12 bases; (2) every receipt banked and every payment approved, with vouchers; (3) monthly bank reconciliations and the suspense account; (4) arrears ageing and recovery steps; (5) TDS deducted and deposited on time; GST if registered; (6) fund balances matched with investments; (7) spending within the committee's limit (Rule 106C-13(5)(b)). The internal auditor should be independent of the person keeping the books.

Question 28

What qualifications must our statutory auditor have, and how do we check that an auditor is eligible before the AGM appoints him?

Accepted Answer

The auditor must be on the Registrar's panel: a chartered accountant or firm with at least three years' co-operative audit experience, or a certified auditor with the Government diploma and five years' experience, in each case with working Marathi. Check the panel listing and that the auditor is within the limit of twenty audits a year. s.81(1)(a), as amended, requires audit by an auditor or firm from a panel prepared by the Registrar and approved by the State Government. The Explanation to s.81 defines who qualifies: (a) a chartered accountant with fair knowledge of societies, at least three years in auditing societies and a working knowledge of Marathi; (b) an auditing firm of more than one chartered accountant with the same experience; (c) a certified auditor, a graduate with the Government Diploma in Co-operation and Accountancy and at least five years' experience; (d) a Government auditor of the Co-operation Department. A further proviso bars an auditor from accepting more than twenty society audits in a financial year, not counting societies with paid-up share capital below Rs 1 lakh, which most housing societies are. dBL 142(b) asks the society to check eligibility and the assignment limit before appointment, and 142(c) to record the written consent. Practical checks: the panel number and validity on the Co-operation Department's list, a written consent letter, the fee quoted, and whether the same auditor has already served the consecutive years the society's bye-laws allow.

Question 29

A new committee finds that three years' accounts were never audited. In what order should they be audited, and can one audit cover all the years?

Accepted Answer

Audit them in order, oldest first, because each year's opening balances come from the previous year's closing. An audit extends back to the date of the last audit, so one auditor may take up the pending years together, but each year still needs its own statements and report. Tell the Registrar what is being done. Rule 69(2): an audit extends back to the last date of the previous audit and runs up to the end of the co-operative year just past, or another date the Registrar directs. So the auditor starts from the last audited balance sheet. Steps: (1) Get the last audited accounts and the old committee's books; the outgoing committee must hand over all records and property. (2) Reconstruct missing books from bank statements, bill counterfoils and vouchers; list gaps. (3) Prepare Receipts and Payments, Income and Expenditure and a balance sheet for each year. (4) The general body appoints a panel auditor; if the society failed to appoint one or file the auditor return, the Registrar may appoint one (s.81(1)(a) proviso). (5) Place the reports before the general body, file Form O, and file the overdue s.79(1A) returns. Delays expose the committee in office at the time to action under s.79, s.146-147 and, for an AGM not held, s.75(5). Missing money found during reconstruction is reported under s.81(1)(e) and may lead to an inquiry (s.83) and surcharge (s.88).

Question 30

The auditor has found that money is missing. What does the law require the auditor and the society to do next?

Accepted Answer

The auditor must investigate, report how it happened, the amount and who is responsible, and tell the Registrar at once if the books contain incriminating evidence. The committee must answer in the rectification report, try to recover the money and, where a crime is likely, file a police complaint. The Registrar may order an inquiry and a surcharge. s.81(1)(e)(i), as amended: where financial irregularities, misappropriation, embezzlement or fraud are found, the auditor investigates and reports the modus operandi, the amount and fixes responsibility on committee members, employees or others, with evidence. s.81(5A): if the books contain incriminating evidence against a past or present officer or employee, the auditor reports immediately to the Registrar and, with the Registrar's permission, may impound the books against a receipt. What follows: (1) s.82 and Rule 73: the society explains and acts within three months and reports in Form O. (2) s.83: the Registrar may hold an inquiry (and must on the application of one-third of members). (3) s.88: after an audit or inquiry, the Registrar may order a person who misapplied or retained money, or caused loss by breach of trust or wilful negligence, to repay it with interest. (4) A criminal complaint to the police is separate and may run alongside. The committee should secure the records, stop the person's access to bank accounts and cash, and inform members at the general body. Consult an advocate before naming anyone publicly.

Question 31

Step by step, how is the section 79(1A) annual return uploaded on the MahaSahakar portal, and what happens after upload?

Accepted Answer

Log in to the society's MahaSahakar account, choose the mandatory return for section 79(1A) and the year, fill the form and upload the documents before 30 September. A return not uploaded is treated as not filed. The Registrar's officers verify the returns and act against societies that did not file or filed wrong details. The Co-operation Department's circular of 16 Dec 2013 set online filing for s.79(1A) and (1B). What to upload by 30 Sep (BL 145(b)): the annual report of activities; audited statements of accounts; the surplus-disposal plan approved by the general body; the list of bye-law amendments; a declaration on the AGM date and elections when due; anything else the Registrar asks for. Steps: (1) keep the society's enrolment and login current; (2) select "mandatory return", then the s.79(1A) return and the financial year; (3) fill the online form from the audited accounts and AGM minutes; (4) upload the documents as PDF within the portal's size limit (the department's guidance deck showed 1 MB per file); (5) save the acknowledgement with the AGM papers. Within one month after the AGM, upload the s.79(1B) return: the name of the panel auditor appointed and his written consent. If not, the Registrar may appoint an auditor, per the circular by 30 Nov. After upload the circular provides for verification by the Registrar's auditors, targeted by 31 Dec, and action under s.73CA, s.146 and s.147 (penalty up to Rs 5,000) for default or incorrect details.

Question 32

Can a housing society pay dividend on shares or an honorarium to office-bearers out of its surplus?

Accepted Answer

Under the 2014 bye-laws, yes, within limits and only with the AGM's approval: after 25 % of net profit goes to the Reserve Fund, the balance may pay dividend up to 15 % on paid-up shares and honorarium up to 15 % of net surplus. No other distribution of funds to members is allowed. s.64: no part of the society's funds, other than net profits, may be paid as bonus or dividend or otherwise distributed among members; a member may be paid remuneration for services under the bye-laws. s.65(2): net profits may be appropriated to funds, dividend, honoraria and other purposes, but only with the AGM's approval. s.66: at least a quarter of net profits goes to the Reserve Fund. BL 147 (2014): 25 % to the Reserve Fund; of the remaining 75 %: dividend not above 15 % a year on paid-up share capital as recommended by the committee and approved by the AGM; honorarium to office-bearers not above 15 % of net surplus or as the general body decides; a common welfare fund; balance carried forward. Cautions: a surplus in a housing society mostly comes from members' own contributions, and paying it out as honorarium can look like members paying themselves. Sitting fees and travel allowances for committee members are a separate item within service charges (Rule 106C-12(2)(d)-(e)). The surplus-disposal plan approved by the AGM is filed with the s.79(1A) return.

Question 33

Before any write-off, how should the society provide in its accounts for arrears it may never recover?

Accepted Answer

Keep the full arrears on the books and in the member's ledger, but set aside a provision or a Bad Debt Fund for the doubtful part, approved by the committee and reported to the AGM. The auditor lists doubtful debts anyway, and a fund makes a later write-off simpler. Rule 69(6)(iv): the audit memorandum schedules money or property that appears to be a bad or doubtful debt. The 2014 bye-laws contemplate a "Bad Debt Fund, specially created for the purpose" (BL 149 proviso), and the draft allows a write-off to be adjusted against a Bad Debt Fund or similar reserve "in accordance with ... applicable Accounting Standards" (dBL 144(d)). Practical approach: (1) Age the arrears: under 3 months, 3-12 months, over 1 year, over 3 years. (2) For each old case record the recovery steps: notices, Form Y-6 recovery application (Rule 106C-14), certificate, execution. (3) Create the fund by appropriation from surplus with AGM approval (s.65), or make a provision in the income and expenditure account. (4) Do not stop recovery: a provision is only an accounting estimate. Even a formal write-off does not waive the right to recover (dBL 144(f)). The actual write-off needs the auditor's certificate and a general-body resolution (BL 148- 149; dBL 144(b)); see accounts_audit-010.

Question 34

What changes in accounts and audit between the 2014 bye-laws, the 2026 Rules and the draft 2026 bye-laws?

Accepted Answer

The Act's core stays the same: audit within six months and before the AGM notice, Form O within three months, returns by 30 September. The 2026 Rules add the committee's duty to budget and ensure timely audit and move audit fees into service charges. The draft bye-laws set a 31 July audit date, longer register lists and a retention schedule. 2014 bye-laws (mh-2014-flat-owner): statements within 45 days (BL 145(a)); audit within six months and before the AGM notice (BL 150(b)); same auditor not more than two consecutive years (BL 150(a)); optional internal auditor (BL 150(d)); Form O within three months (BL 152); write- off with auditor's certificate, general-body sanction and, unless class A or B with a Bad Debt Fund, outside approvals (BL 148-149). 2026 Rules (mh-2026-rules, in force 22 Jun 2026): the committee prepares the annual budget, maintains financial records and ensures timely audits (106C-13(2)(a)); audit fees for internal, statutory, re-audit and test audit are service charges shared equally (106C-12(2) (h)); funds listed in 106C-11. Draft 2026 bye-laws (mh-2026-draft): books handed to the auditor within 60 days (dBL 141(3)); audit report by 31 July (141(4)); statements displayed 14 days before the AGM (141(5)); Register of Auditors and Register of Audit Objections (140(2)); committee responsible even when a software provider keeps the books (140(4)); joint and several responsibility (143(e)); write-off register and survival of the right to recover (144-145); retention periods (138). On auditor rotation the draft says only that the auditor must not have exceeded "the audit assignment limit prescribed under the Act" (dBL 142(b)). Until the final bye-laws are notified and adopted, the draft is guidance only.

Question 35

Can the society keep its accounts only in software, and who is responsible if the software company or the outside accountant makes mistakes?

Accepted Answer

Yes. Records may be kept physically, electronically or both. But the committee stays responsible for their correctness, completeness and preservation even when an accountant or software provider keeps them. Keep exports and backups the society controls. dBL 138(b) and 140(1) allow books, registers and records in physical or electronic form, and dBL 140(4) says that where accounting is entrusted to an accountant, consultant or software service provider, the committee remains responsible. The 2014 bye-laws already made the committee jointly and severally responsible for its decisions and for acts and omissions against the society's interest (BL 136) and put the books on the secretary unless the committee decides otherwise (BL 142). Safeguards to put in the contract and the routine: (1) the society owns the data; year-end exports (ledger, trial balance, member ledgers) in a standard format are kept by the society; (2) the auditor gets read-only access and a complete audit trail of edits; (3) entries after the books are closed need committee approval; (4) retention: accounting records for ten years and financial statements permanently under the draft schedule (dBL 138); (5) access removed promptly for outgoing office-bearers and staff; (6) member personal data is handled under the DPDP Act and Rules. A contractor's error that causes loss can be pursued against the contractor, but the society's answer to the auditor and Registrar remains the committee's.

Question 36

Who pays the statutory auditor's and the accountant's fees, and are they shared equally by every flat?

Accepted Answer

The society pays; the general body fixes the statutory auditor's fee. Audit fees, including internal audit, re-audit and test audit, are service charges, which the 2026 Rules share equally among flats, not by area. s.81(1)(f) (as amended): the auditor's remuneration is borne by the society at the rate fixed by its general body. BL 150(c) says the same. Rule 106C-12(2)(h) lists "audit fees for internal, statutory, re-audit, and test audit, if any" among service charges, and item 1 of the table in 106C-12(4) divides service charges equally by the number of units or flats. The salary or fee of an accountant or office staff is also a service charge (106C-12(2)(a)). The Registrar may also levy audit and supervision charges on classes of societies under Rule 74; these too would be shared as service charges. Good practice: fix the fee in the AGM resolution that appoints the auditor; ask for a written engagement letter stating the scope and the fee including taxes; deduct TDS where the annual fee crosses the professional-fees threshold (see tax_gst-006); and show audit fees as a separate expense head so members can compare years.

Question 37

The society never sent me a bill, but now it is charging interest on my arrears. Can it do that?

Accepted Answer

Interest runs only on dues that were demanded and not paid in time. The bill is the written demand. It fixes the due date and the payment period, and interest may be charged only after that period ends. If no bill or demand was served, the society should serve one first and charge interest only from the end of the payment period it allows. Under the 2014 bye-laws the Secretary prepares a bill or demand notice for the charges and issues it by the date the committee fixes. The member pays within the period the committee fixes (BL 68). Interest runs from the date the amount was due under BL 69 (BL 70). The draft 2026 bye-laws are more explicit: - every bill is deemed a written demand (dBL 64(ii)); - the general body fixes the billing cycle and the payment period, or 15 days from service if it has not
  (dBL 64(iii)-(iv));
- no interest is charged during the payment period (dBL 66); - a member becomes a defaulter only three months after service of the bill or the due date, whichever is
  later (dBL 65(a)).
The recovery procedure under s.154B-29 also depends on bills. Form Y-6 treats an amount as arrears only when unpaid within three months of service or the due date, and the application must attach the notices. So a society that never billed will struggle both to justify interest and to recover. If you dispute interest, pay the undisputed principal (a complaint may otherwise not be heard, dBL 184(c)), ask in writing for the bills and the ledger, and raise the interest line with the committee.

Question 38

I have received the society's annual accounts. What are the statements, and what should a member look for?

Accepted Answer

Three statements in Form N: Receipts and Payments (cash in and out), Income and Expenditure (the year's surplus or deficit), and the Balance Sheet (funds, dues and investments at 31 March). Check that each fund is backed by matching bank deposits, how much members owe, whether the audit class and objections are disclosed, and whether spending matches the budget. The committee finalises the statements within 45 days of 31 March (BL 145(a); Rule 61). Rule 62(1) prescribes Form N. They go to the statutory auditor, who must complete the audit within six months and before the AGM notice (s.81). The audited statements, the audit report and the committee's report are displayed at least 14 days before the AGM (dBL 141(5)). Points to check: - Receipts and Payments: large cash payments; payments above the cheque limit (BL 143-144). - Income and Expenditure: repairs above the committee's spending limit without general-body approval (see
  committee-001); legal fees; the surplus or deficit.
- Balance Sheet, liabilities: sinking fund, repair fund and other funds. Each should be matched by
  investments; the sinking-fund register shows this (BL 15). Advance maintenance received.
- Balance Sheet, assets: members' arrears (who owes and for how long) and fixed deposits with the bank
  names, which must be permitted modes (see funds_investments-006).
- Audit report: the class (A-D), the objections, and last year's rectification report (Form O). Members can inspect the last audited balance sheet free and get copies (s.32; dBL 37). Raise questions in writing before the AGM so the answers are minuted.

Question 39

The accounts show a surplus for the year. Can it be refunded to members or used to cut next year's maintenance?

Accepted Answer

The general body decides how the surplus is used, on a plan the committee puts to the AGM. That plan is part of the annual return. Under the 2014 bye-laws, a quarter of any net profit goes to the reserve fund first. Adjusting a genuine surplus of maintenance collections against next year's budget is common. A cash refund, or paying out earmarked fund money, is not. The committee lays a plan for disposal of the surplus before the AGM (s.75(2)(iii); dBL 95(c), draft), and the plan approved by the general body is part of the returns filed within six months of the year end, that is by 30 September (s.79(1A)(c); see accounts_audit-008). Under the 2014 bye-laws (BL 147 in the archived text), 25 % of net profit goes to the reserve fund, as s.66(2) also requires (at least one-fourth). The rest is applied as BL 147(b) lists, including a dividend of up to 15 % on paid-up share capital that the AGM approves. Rules 49A (calculation of net profit) and 50-52 still apply to housing societies; Rule 106C-1 disapplies Rule 53, but that rule only fixes contributions to the State federal education fund, so it does not change the appropriation. Practical points: - separate the true surplus of service-charge collections from fund contributions. Sinking, repair and other fund money is not surplus and stays in its fund (BL 14; Rule 106C-11); - interest earned on fund investments belongs to the fund (BL 15; see funds_investments-011); - a surplus reduces next year's service-charge requirement when the general body approves the budget; - a general cash refund to members is unusual. It should not be made without clear general-body approval and the auditor's comfort, and never from earmarked funds. A chartered accountant should confirm the tax position. Mutuality generally keeps member surpluses out of income tax (see tax_gst-004).

Question 40

What are the rules for handling cash in the society office?

Accepted Answer

Only the Secretary or a paid employee authorised by committee resolution may hold cash. At the close of each day no more than Rs 5,000 may be kept for petty expenses; any excess must be banked within three days. Every rupee received gets a numbered receipt, and every rupee paid out needs a voucher and bill. Payments above Rs 1,500 must be by cheque. BL 143 fixes the Rs 5,000 cash-in-hand limit and the three-day banking rule. Rule 107-C of the MCS Rules says the same in general terms: only the Secretary or an employee authorised by resolution handles cash, and the excess goes to the bank within three days. BL 144 requires crossed account-payee cheques for payments above Rs 1,500; in practice a bank transfer serves the same purpose. Daily routine: - write each cash receipt in the cash book the same day, with the receipt number; - count the cash at day end, match it to the cash book, and have the counter sign; - bank the excess with a deposit slip; keep the counterfoil (BL 141(xviii)); - keep cash in a locked box, with the key held by the authorised person only. An employee who handles cash must furnish security under Rule 107-B (BL 146); see accounts_audit-206. Encourage members to pay by bank transfer or UPI to the society's account, which removes most cash from the office.

Question 41

Who should sign the society's cheques, and how do we change the bank signatories after an election?

Accepted Answer

The bank account is operated jointly, not by one person. The draft 2026 bye-laws say the Secretary operates it together with the Chairman or the Treasurer, or another office-bearer the committee authorises. After an election, the new committee passes a resolution naming the signatories and the mode of operation, and gives the bank a certified copy with the new signatories' KYC. dBL 108(b) requires joint operation and joint authorisation of all receipts, payments, cheques and electronic transactions. The 2014 bye-laws do not name the signatories; the committee fixes them by resolution. Two of three (Chairman, Secretary, Treasurer) is the common arrangement. Steps after a change: 1. Committee resolution: account numbers, names of authorised signatories, "any two jointly"
   (or as decided), net-banking maker and checker roles, and removal of the old signatories.
2. Certified true copy of the resolution, signed by the Chairman and Secretary under the seal. 3. The bank's signatory-change form, specimen signatures, and ID and address proof of each new
   signatory.
4. Collect the old cheque books and any net-banking tokens during the handover (committee-208). Never sign blank cheques. Keep cheque counterfoils filled in (BL 141(xix)). For net banking, one person should prepare and another approve.

Question 42

How should maintenance bills and receipts be issued and kept?

Accepted Answer

The Secretary prepares and issues a bill to every member for the society's charges, head by head, as the general body has fixed them. Every payment received gets a numbered receipt. Keep the counterfoils or copies of both bills and receipts, and post each one to the member's personal ledger. Issuing bills or demand notices is one of the Secretary's functions (BL 139, item 9, under BL 68). The bye-laws require files of the counterfoils or carbon copies of receipts and of bills (BL 141(xxiv), (xxv)). Each member has an account in the personal ledger (BL 140). A bill should show: the member, the flat, the period, each charge head (service charges, repair and maintenance fund, sinking fund, water, parking, non-occupancy charges where applicable, and so on), arrears, interest charged at the rate the general body fixed (capped at 12 % simple a year from 22 Jun 2026, Rule 106C-12(4)), the due date and the bank details. A receipt should show: its serial number, date, member and flat, amount, mode (cheque number or UTR), and which bill it settles. Never reuse or tear out a receipt number. A cancelled receipt stays in the book marked "cancelled". Software-generated bills and receipts are fine if the numbering is continuous and the records are backed up. For how long to keep them, see dBL 138(d).

Question 43

How should petty cash be run day to day?

Accepted Answer

Use a fixed imprest: the committee authorises a person and a float within the Rs 5,000 cash-in-hand limit. Every petty payment gets a voucher with the bill and the payee's signature. When the float runs low, the vouchers are checked, entered in the cash book, and the float is topped up by a cheque or withdrawal equal to what was spent. The bye-laws fix only the ceiling: Rs 5,000 in hand at day end, with the excess banked within three days (BL 143), and payments above Rs 1,500 by cheque (BL 144). The imprest method is good practice that keeps within them. - Name the custodian by committee resolution (Rule 107-C). - Petty cash is for small items such as cleaning material, bulbs, courier charges and tea
  for a meeting. Not for salaries, contractor bills or advances to committee members.
- Each voucher: date, purpose, amount, the bill attached, the payee's signature, and approval
  by the Treasurer or Secretary.
- Weekly or monthly, the Treasurer counts the cash, checks it against the vouchers and signs
  the petty cash book.
- Vouchers are filed in cash-book order (BL 141(xvii)). A surprise count by the Treasurer once in a while is a cheap and effective control.

Question 44

How do we prepare for the statutory audit?

Accepted Answer

Close the books and prepare the receipts and payments account, the income and expenditure account and the balance sheet within 45 days of 31 March. Assemble the registers, vouchers, bank statements, FD receipts, member ledgers and the previous audit's rectification report. The committee must get the audit done within six months of the year end and before the AGM notice goes out. BL 145(a) gives 45 days to finalise the accounts, with the list of members and schedules of investments, debtors, creditors and assets. BL 150(b) makes the committee responsible for completing the audit within six months and before the AGM notice. BL 151 requires the Secretary to produce all books and records to the auditor. The draft 2026 bye-laws add handing the records to the auditor within 60 days of the year end (dBL 141(c)). An audit file checklist (good practice): - trial balance, final accounts and all schedules; - bank reconciliations for every account as on 31 March, with bank statements; - FD receipts and interest certificates; the investment register; - member-wise dues list agreeing with the personal ledger; the arrears ageing; - bills, receipts and vouchers in order; the fixed-asset and property register; - committee and general-body minutes for the year (for approvals of spending); - TDS returns and challans, GST returns if registered, the income-tax return; - the previous Form O rectification report with status; - copies of AMCs, insurance policies, and lift and fire certificates. The auditor must be from the state panel and appointed by the general body (BL 150(a)); see accounts_audit-004.

Question 45

Must an employee who handles the society's cash give security?

Accepted Answer

Yes. Every paid employee holding office and handling the society's cash or securities must furnish security as Rule 107-B of the MCS Rules provides (BL 146). The Rule sets minimum amounts by the society's paid-up share capital and allows part in cash and the rest as personal security or a fidelity guarantee policy. Rule 107-B covers every officer or employee required to handle cash, securities or property. The minimums in the printed table are small: for a society with paid-up capital up to Rs 1.50 lakh, Rs 1,000 for an officer and Rs 500 for another employee; above that, Rs 2,000 and Rs 1,000. It may be given as Rs 200 in cash plus personal security or a fidelity guarantee policy, or the full amount in cash, government securities or postal savings. Those figures are old and low. Many societies instead take a fidelity guarantee insurance cover for staff who handle collections; that is a committee decision, not a legal requirement. Record the security in the committee minutes and keep the documents in the employee's file.

Question 46

What should the treasurer review every month?

Accepted Answer

A monthly close keeps the year-end and the audit easy: reconcile each bank account, match the cash book, post all bills and receipts to member ledgers, list defaulters for the committee, check TDS deducted and deposited by the 7th, and compare spending against the budget. This is good practice built on the committee's statutory duties. The committee must maintain financial records, prepare the budget and ensure timely audit (Rule 106C-13(2)(a)). The Secretary must bring defaults to the committee's notice (BL 139, item 10; BL 69), and the committee must review recovery (BL 137, item 12). The draft makes the Treasurer responsible for supervising the books, monitoring collections and statutory deductions (dBL 135). Monthly checklist: - bank reconciliation for every account, with unexplained items followed up; - cash book balanced and petty cash counted (accounts_audit-204); - bills issued and receipts posted; unallocated receipts cleared; - defaulters list with ageing, for the committee meeting; - TDS deducted and deposited by the 7th of the next month (tax_gst-201); GST return if
  registered;
- FDs maturing in the next 30 days (funds_investments-202); - actual expenses against the budget, head by head; - renewals falling due: insurance, lift licence and AMC, fire Form B. Put a one-page summary before each committee meeting and file it with the minutes.

Accounts & auditहिशेब व लेखापरीक्षण