Housing Society Its Statutory Audit

Housing Society Its Statutory Audit

• Category: Economy
• Date 12-05-2025

Housing Society Its Statutory Audit

A statutory audit of a housing society is conducted under the Maharashtra Cooperative Societies Act, 1960. It ensures the society’s financial and statutory compliance. Here's a structured guide on all aspects of statutory audits for housing societies:

1. Records to be Maintained by the Society for Statutory Audit

These must be properly maintained and up-to-date:

Financial Records

• Cash Book & Bank Book

• General Ledger

• Journal Entries

• Trial Balance

• Income & Expenditure Statement

• Balance Sheet with schedules

• Audit Rectification Register (for previous audit)

Banking Records

• Bank Passbooks / Statements of all accounts

• Fixed Deposit Receipts (FDRs)

• Bank Reconciliation Statements (BRS)

Member-related Records

• Membership Register (Form I, J, K)

• Share Certificate Register

• Register of Nomination

• Allotment Register

• Maintenance Bills, Receipts

Meeting & Statutory Registers

• Minute Books (AGM, SGM, Managing Committee Meetings)

• Attendance Registers

• Register of Investments

• Register of Property/Assets

• Bye-laws of the society (certified copy)

• Annual General Body Meeting (AGM) Reports & Resolutions

Tax and Compliance Records

• TDS Returns

• GST Returns (if applicable)

• Professional Tax and other statutory filings

• Property Tax Receipts

• Water/Electricity Bills & Receipts

Legal & Contractual Documents

• Audit reports of previous years

• Legal correspondence (if any)

• AMC/Service Contracts

• Insurance policies

2. Records Carefully Checked by the Statutory Auditors

Auditors focus on:

• Cash/Bank transactions: Verification of receipts, payments, approvals

• Maintenance charges: Billing, collections, arrears

• Expenses: Authorized payments, quotations, tenders

• Investments & Interest income

• Legal Compliance: Filing of returns, TDS, GST, and taxes

• Verification of Assets & Liabilities

• Proper Approvals: Meeting resolutions for expenses, projects, appointments

3. How to Draft Points When Starting the Statutory Audit

Auditor can use the following checklist to draft opening points:

Pre-Audit Planning Note:

• Name of Society, Registration No., Address

• Period under Audit

• Date of commencement of audit

• Auditor's name & appointment letter reference

• Objectives: Verification of financial accuracy, statutory compliance, mismanagement if any

Points for Entry Meeting:

• Request for documents (see list above)

• Inquiry on changes in committee or members

• Major repairs/projects undertaken

• Legal cases, disputes if any

• Internal control practices followed

4. Do's & Don’ts for Statutory Auditors

Do’s

• Remain impartial and objective

• Verify supporting documents for transactions

• Ensure compliance with MCS Act and Rules

• Follow audit standards

• Report irregularities, misappropriations if any

• Suggest corrective actions in the audit report

Don’ts

• Do not accept unverified data or oral assurances

• Avoid conflicts of interest

• Do not delay or overstep the audit scope

• Do not interfere in management decisions

5. Do's & Don’ts for Managing Committee During Statutory Audit

Do’s

• Provide all requested records promptly

• Cooperate with auditor’s queries

• Ensure availability of office bearers for audit

• Implement suggestions from previous audit reports

• Maintain transparency in dealings

Don’ts

• Do not hide or withhold documents

• Avoid manipulation of accounts after audit begins

• Do not intimidate or pressure the auditor

• Do not ignore auditor’s red flags

Summary

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To,
The Chairman/Secretary
[Name of the Housing Society]
[Registration No.]
[Address]

Subject: Initiation of Statutory Audit for the Financial Year [YYYY–YY]

Dear Sir/Madam,

This is to inform you that I/we have been appointed as the Statutory Auditor of your society for the financial year [YYYY–YY] in accordance with Section 81 of the Maharashtra Co-operative Societies Act, 1960.

In this regard, the statutory audit of the books of accounts and statutory records of your society will commence from [Proposed Start Date]. The audit will be conducted at your registered office/premises.

We kindly request the managing committee and office bearers to provide the following support:

Documents and Records Required

Please keep ready the following records for verification:

1. Cash Book, Bank Book, and General Ledger

2. Trial Balance and Final Accounts (Income & Expenditure A/c, Balance Sheet)

3. Bank Passbooks and Bank Reconciliation Statements

4. Maintenance Billing and Collection Registers

5. Receipts and Payments Vouchers with supporting bills

6. Fixed Deposit Receipts (FDRs), Investment Registers

7. Share Register, Nomination Register, Membership Register

8. Minutes Book of AGM, SGM, and Managing Committee Meetings

9. TDS Returns, GST Returns (if applicable), Property Tax Receipts

10. Register of Assets and Liabilities

11. Legal, AMC, Insurance, and Contractual Documents

12. Previous year's Audit Report and Rectification Register

Audit Scope and Objective

The audit will focus on:

• Verification of financial statements and compliance with the Maharashtra Co-operative Societies Act, 1960

• Ensuring proper maintenance of accounts and registers

• Verification of statutory dues, taxes, and audit rectifications

• Identifying any financial irregularities or lapses

We look forward to your full cooperation during the course of the audit. Kindly confirm your availability and the proposed date. For any queries, please feel free to contact us.

Thanking you,

Yours faithfully,
For [Audit Firm Name]
(CA [Full Name])
Chartered Accountant
Membership No.: [XXXXX]
FRN: [XXXXXX]

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INTERNAL AUDIT READINESS CHECKLIST – HOUSING SOCIETY

Instructions for Committee:

• Tick off each item as "

  INTERNAL AUDIT READINESS CHECKLIST – HOUSING SOCIETY

  	Item	Remarks / Status
  A. Financial Statements
  ☐	Trial Balance for the year
  ☐	Income & Expenditure Statement
  ☐	Balance Sheet with schedules
  ☐	Ledger of each account head
  ☐	Receipts & Payments Statement
  B. Cash & Bank Records
  ☐	Cash Book (with daily balance)
  ☐	Petty Cash Register
  ☐	Bank Book (for each account)
  ☐	Bank Passbooks/Statements (all accounts)
  ☐	Bank Reconciliation Statements (monthly)
  C. Member and Billing Records
  ☐	Member Register (Form I, J, K)
  ☐	Share Certificate Register
  ☐	Maintenance Billing Register
  ☐	Arrears Statement (Member-wise)
  ☐	Receipts issued for collections
  D. Meeting & Statutory Registers
  ☐	Minutes of Managing Committee Meetings
  ☐	Minutes of AGMs/SGMs
  ☐	Attendance Registers
  ☐	Bye-laws (certified copy)
  ☐	Membership transfer and nomination records
  E. Taxation & Compliance
  ☐	PAN and TAN details of the society
  ☐	TDS Returns filed (Form 26Q/16A)
  ☐	GST Returns (if applicable)
  ☐	Professional Tax Payment Receipts
  ☐	Property Tax and Water Bill Receipts
  F. Fixed Deposits & Investments
  ☐	List of current FDs with maturity dates
  ☐	FD Receipts/Certificates
  ☐	Investment Register
  G. Expenses & Vouchers
  ☐	Bills and supporting for all expenses
  ☐	Vouchers with authorisation (cash & bank)
  ☐	Vendor/contractor agreements
  ☐	AMC Agreements (lift, pump, generator, etc.)
  ☐	Expense quotations, tenders (if any)
  H. Assets and Property Records
  ☐	Fixed Asset Register
  ☐	Insurance Policies (building, equipment)
  ☐	Inventory of stores/spares
  I. Previous Audit and Rectifications
  ☐	Previous Statutory Audit Report
  ☐	Audit Rectification Register (updated)
  ☐	Status of pending audit observations
  J. Legal and Miscellaneous
  ☐	Copies of legal notices (if any)
  ☐	Copies of contracts and licenses
  ☐	Nomination Forms filed by members

  
  

   Instructions for Committee:

  • Tick off each item as "

    INTERNAL AUDIT READINESS CHECKLIST – HOUSING SOCIETY

    ✅	Item	Remarks / Status
    A. Financial Statements
    ☐	Trial Balance for the year
    ☐	Income & Expenditure Statement
    ☐	Balance Sheet with schedules
    ☐	Ledger of each account head
    ☐	Receipts & Payments Statement
    B. Cash & Bank Records
    ☐	Cash Book (with daily balance)
    ☐	Petty Cash Register
    ☐	Bank Book (for each account)
    ☐	Bank Passbooks/Statements (all accounts)
    ☐	Bank Reconciliation Statements (monthly)
    C. Member and Billing Records
    ☐	Member Register (Form I, J, K)
    ☐	Share Certificate Register
    ☐	Maintenance Billing Register
    ☐	Arrears Statement (Member-wise)
    ☐	Receipts issued for collections
    D. Meeting & Statutory Registers
    ☐	Minutes of Managing Committee Meetings
    ☐	Minutes of AGMs/SGMs
    ☐	Attendance Registers
    ☐	Bye-laws (certified copy)
    ☐	Membership transfer and nomination records
    E. Taxation & Compliance
    ☐	PAN and TAN details of the society
    ☐	TDS Returns filed (Form 26Q/16A)
    ☐	GST Returns (if applicable)
    ☐	Professional Tax Payment Receipts
    ☐	Property Tax and Water Bill Receipts
    F. Fixed Deposits & Investments
    ☐	List of current FDs with maturity dates
    ☐	FD Receipts/Certificates
    ☐	Investment Register
    G. Expenses & Vouchers
    ☐	Bills and supporting for all expenses
    ☐	Vouchers with authorisation (cash & bank)
    ☐	Vendor/contractor agreements
    ☐	AMC Agreements (lift, pump, generator, etc.)
    ☐	Expense quotations, tenders (if any)
    H. Assets and Property Records
    ☐	Fixed Asset Register
    ☐	Insurance Policies (building, equipment)
    ☐	Inventory of stores/spares
    I. Previous Audit and Rectifications
    ☐	Previous Statutory Audit Report
    ☐	Audit Rectification Register (updated)
    ☐	Status of pending audit observations
    J. Legal and Miscellaneous
    ☐	Copies of legal notices (if any)
    ☐	Copies of contracts and licenses
    ☐	Nomination Forms filed by members

    Instructions for Committee:

    • Tick off each item as "tick" once verified and kept ready.

    • Use the “Remarks/Status” column to note issues or pending documents.

    • Assign responsibility to one MC member to coordinate with the auditor.

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If a housing society has appointed an auditor in its AGM as required under the Maharashtra Co-operative Societies Act, 1960 (MCS Act) and Rules, but failed to inform the Registrar, the society can still defend itself with reasonable legal and procedural arguments — especially if the appointment was validly made by the General Body.

Here are defense points the society can take if questioned or penalized for non-intimation:

1. Substantial Compliance of Law

The society can argue that it complied with the substantive requirement under Section 81(1)(b) of the MCS Act, by appointing a certified auditor in the AGM as mandated.

The only lapse was procedural — i.e., not submitting the prescribed intimation (usually Form 29C) to the Registrar — and this does not invalidate the appointment.

2. No Malafide Intention

Society can state that there was no intention to conceal or avoid compliance.

The lapse was inadvertent or due to lack of awareness about the obligation to file intimation with the Registrar.

Courts and authorities often take a lenient view on technical lapses where no fraud or suppression is involved.

3. Rectification is Possible

The society may say that the lapse is rectifiable by submitting a delayed intimation along with an explanation.

As per administrative norms, many Deputy/Assistant Registrars do accept late filings with penalty or late fee.

 4. Auditor is on the Panel Approved by the Registrar

If the auditor appointed is from the panel of government-approved auditors, the society can argue that the appointment is valid in spirit and in law.

5. Timely Audit Conducted

If the appointed auditor has already conducted or is conducting the audit within the due time frame (usually by Sept 30), this strengthens the society's case that no harm was caused by the delayed intimation.

The Registrar's core interest is ensuring that audits are timely and reliable, not just bureaucratic compliance.

Legal References:

MCS Act Section 81(1)(b): Audit to be conducted by an auditor appointed in AGM.

Rule 69 of MCS Rules, 1961: Auditor must be appointed from a government-approved panel.

Circulars issued by the Co-op Department also require Form 29C to be filed after the AGM.

 Optional Actions:

The society may:

File Form 29C belatedly with an explanation letter.

Pass a resolution in the next committee meeting ratifying the appointment and authorizing the Secretary/Chairman to regularize the intimation.

======================================================================================

Form 29C – Maharashtra Co-operative Societies Act Context

This Form 29C is required as per Rule 61 of the Maharashtra Co-operative Societies Rules, 1961, and is related to submission of resolutions passed at the Annual General Meeting (AGM) of a Co-operative Housing Society.

Purpose of Form 29C:

To submit the list of resolutions passed in the AGM to the Registrar of Co-operative Societies within 30 days of holding the AGM.

Details Required in Form 29C:

• Name and address of the society

• Registration number and date

• Date of AGM

• Details of resolutions passed:

  • Adoption of Audit Report

  • Appointment of Auditor

  • Budget approval

  • Maintenance rates

  • Election resolutions (if any)

  • Any other society-specific decisions

• Certification by the Secretary and Chairman

Form 29C  

[See Rule 61 of the Maharashtra Co-operative Societies Rules, 1961]

To,  

The Registrar,  

Co-operative Societies,  

______________________(Address of Registrar Office)

Subject: Submission of Resolutions Passed at the Annual General Body Meeting held on __/__/20__

Name of Society: ____________________________________  

Address: ___________________________________________  

Registration No.: ____________________________________  

Date of Registration: _________________________________

Sir/Madam,

We, the undersigned, hereby submit the following resolutions passed at the Annual General Body Meeting held on __/__/20__:

1. Adoption of audited accounts and audit report for the year _______

2. Appointment of statutory auditor for the financial year _______

3. Approval of maintenance charges and budget for the year _______

4. Any other resolutions (specify): ____________________________

This is in compliance with Rule 61 of the MCS Rules, 1961.

Certified that the above information is true and correct as per the minutes of AGM held on __/__/20__.

Date: __/__/20__  

Place: ____________

Signature: ___________  

(Chairman)

Signature: ___________  

(Secretary)  

Seal of the Society

Important Notes:

• Must be submitted to the Registrar within 30 days of AGM.

• Submission can be done physically or through the Sahakar Setu portal (if applicable).

• Non-submission may lead to penalties under MCS Act.

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Section 81 – Audit (1)(b)

Under Section 81(1) of the MCS Act:

"The Registrar shall audit, or cause to be audited at least once in each co-operative year, by a person authorized by him by general or special order in writing in this behalf, the accounts of every society."

Section 81(1)(b) states:

"(b) The audit under clause (a) shall include an examination of overdue debts, if any, verification of cash balance and securities, and valuation of the assets and liabilities of the society."

Key Elements of Section 81(1)(b):

1. Audit Scope:

   • Not just a routine financial audit.

   • Must examine overdue debts (outstanding dues from members or others).

   • Verify cash balances and securities held by the society.

   • Valuate the society’s assets and liabilities, giving a true financial picture.

2. Purpose:

   • To ensure financial transparency and accountability in the functioning of co-operative societies.

   • Helps the Registrar and members assess the financial health of the society.

Implications for Housing Societies:

• The auditor appointed by the Registrar (or selected from a panel approved by him) must perform a comprehensive audit.

• Societies must cooperate fully and provide necessary documents for:

  • Debtors' list.

  • Bank statements and cash records.

  • Details of assets like land, building, fixed deposits, etc.

  • Records of loans given or taken.

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Last updated: 19/05/2025

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