Annual Accounts Related Correspondance
Co-Operative Societies - Many times, the Annual Accounts of Co-operative Societies are prepared in a hurried manner and do not reveal much meaningful information except beyond that required for statutory purposes.
In one such case, query was sent to the Managing Committee on the annual accounts circulated.
Extracts of this edited correspondance are shown below.
Firstly, we would like to voice our appreciation to the managing committee for the various disciplinary steps initiated over the past few years in an effort to drive transparency and organization in the overall functioning of the society.
We have often cited the professional vigilant management of this managing committee members to members of other co-operative societies who are facing problems either with the Registrar's office or with other errant members themselves.
We have gone through the Accounts sent and have the following queries from the same :
1.0 - Auditor's Report - Form No 1 & Form No 28 are referred to in the same but the same have not been enclosed with the report.
We would like to know whether the information in these two forms is required to be published along with the annual accounts.
2.0 - Auditor's Reports - Notes.
2.1 - Whether the Income Tax (and possible future Service Tax) implications and risks of changing the accounting policy for penalties from receipts to accruals has been considered not only for the future but also past assessment years.
2.2 - Annual Report - A large amount has been shown outstanding from the members.
Whether the same is actually recoverable from a legal and practical standpoint under Section 101 of MCS Act, 1960 as per the esteemed legal and professional advice received by the society with minimal future time and cost consuming expensive consulting and litigation costs.
The highest increase in current year's establishment expenses has been Legal & Professional Expenses as the Managing Committee would be kindly aware.
What is the likelihood of confirmation & subsequent clearing of debtor's balances, as per Society's past experience and future expectations?
3.0 - Annual Report - Some clarifications from the points below would be appreciated :
3.1 - You have mentioned "Interactions with statutory authorities".
We would like some more detailed information on the same at the AGM or otherwise, especially in the light of Points 2.1 and 2.2 above and the high legal and professional expenses incurred in the accounting year and the likelihood of the same in future years.
3.2 - We are not clear about the workings of the subsidy figure per member.
Also, as per our understanding, the surplus that has been mentioned under this point has primarily been caused by the accounting policy change as per 2.1.
Also, if there is an annual subsidy per member on the operating side, then the surplus is only an accounting surplus and not an operating surplus.
Consequently,the success of future Section 101 society recovery actions assume a lot of importance, emphasis and focus which I am sure the esteemed Society management is striving for in the years to come.
3.3 - Income and Expenditure Account
3.3.1 - More details on Legal and Professional Expenses - whether the same spent on Statutory Legal Expenses (e.g. Court Fees, Stamp Duties) or Professional Fees, etc ?
Whether for new or pending cases.
What would be the projected expenses for the coming years ?
3.3.2 - Under 'Miscellaneous Members Income' it is observed that for all the various heads except breaches and penalties, the income has come down.
We would like to know possible reasons for the same and whether this worrying trend would continue in the coming years.
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3.3.3 - Also, in the same category ' Miscellaneous Income..', the word 'Suppli.' is not clear. Does it mean 'Supplier' or does it mean 'Supplied'?
Also, no figures have been mentioned for the period 1st January to 31st March.
We would kindly request additional information and clarification on the same as appropriate.
3.4 - Member's Trial Balance
3.4.1 - Whether it is possible to get figures upto 31/03/2005 and annual figures between 1/04/2005 and 31/03/2006.
3.4.2 - There seems to be some arithmetical accounting rounding off discrepancy between the above figure and that mentioned on Balance Sheet Page (As Dues from Members).
3.5 - Whether it would be possible for members to get an Annual Cash Flow statement if permitted under statutory rules and regulations in addition to the above annual accounts as it would give a clearer picture on the accounting / operating surplus or subsidies as the case may be.
Thanking you in advance for your patience and understanding in responding to the above queries as appropriate.
Having interacted with the Honorable Secretary on a few occasions in the past and having sought his experience and legal advice, we would like to once again thank all the Managing Committee members for their sincere efforts in working towards a harmonious and transparent functioning of the society.
It is an honorary thankless job consuming personal time and resources, which very few members appreciate.
Thanks to you and other Managing Committee members for the same.