Why Annual Audits Are Mandatory
Under the Maharashtra Co-operative Societies Act, 1960 (and similar legislation in other states), every registered Co-operative Housing Society must get its accounts audited annually by a qualified auditor empanelled with the Co-operative Department. Failure to do so can result in penalties and complications at the AGM. For RWAs registered under the Societies Registration Act, 1860, the requirement may differ by state but annual accounting remains best practice.
Pre-Audit Checklist
Books of Accounts
- Cash book — all cash receipts and payments recorded chronologically
- Bank book / bank ledger for each society bank account
- General ledger with all income and expense accounts
- Member ledger — individual accounts for every flat showing dues, payments, and outstanding
- Sinking fund ledger (separate from maintenance accounts)
- Fixed asset register (furniture, equipment, generator, CCTV, etc.)
Bank Documents
- Bank statements for all accounts for the full financial year
- Bank reconciliation statements — month by month
- Fixed deposit receipts and interest certificates
- Cancelled cheque leaves or account closure documents (if any accounts closed)
Income Documents
- Maintenance bill copies — at least sample bills from each quarter
- Payment receipts issued to members for all payments received
- Non-occupancy charge records (if applicable)
- Parking and hall booking income registers
- FD interest income — bank certificates or account statements
Expense Documents
- All original vendor invoices with supporting payment proof (NEFT receipts or cheque stubs)
- Salary payment records — bank transfer proof or signed salary registers
- EPF and ESIC payment challans for all months
- Utility bills (electricity, water) with payment confirmations
- AMC contracts and service invoices
- Committee meeting resolutions approving capital expenditures
Statutory Documents
- Society registration certificate
- Last approved bye-laws copy
- Previous year's audited balance sheet and income and expenditure account
- AGM minutes where budget and accounts were approved
- Managing Committee meeting minutes for the year
- Member list with flat numbers (for reconciling dues)
Organise documents in monthly folders — one folder per month containing all invoices, receipts, and bank statements for that month. Auditors work much faster with organised files, reducing the time and disruption of the audit process.
What Auditors Typically Check
- Bank balance per books matches bank statement (reconciliation)
- All income has been receipted and deposited to the bank
- All expenses have supporting invoices approved by the Committee
- No payments made without committee approval (especially above a threshold defined in bye-laws)
- Sinking fund is maintained separately and invested as required
- Member dues register is accurate and matches the bank deposits
- TDS deducted and deposited where applicable (salary above threshold, contract payments)
Common Audit Observations and How to Avoid Them
- Missing vouchers: Never pay without an original invoice. Insist on invoices from all vendors before payment
- Cash payments above ₹10,000: Use NEFT or cheque for all payments above this limit
- Unreconciled bank accounts: Reconcile monthly, not at year end
- Sinking fund mixed with maintenance account: Maintain in a separate bank account
- Advance payments without committee approval: Always pass a committee resolution before advances