KERALA COOPERATIVE AUDIT MANUEL VOLUME I PART II CHAPTER II

For Revised Manual Clickhere

CHAPTER II

AUDIT OF STATE/APEX LEVEL CO-OPERATIVE

INSTITUTIONS

Special features to be looked into by the Auditor while auditing the accounts of the following State/Apex level Co-operative institutions have been briefly discussed in this chapter.

(1) Kerala State Co-operative Bank Ltd.,

(2) Kerala State Co-operative Apex Housing Co-operative Society Ltd.,

(3) Kerala Co-operative Central Land Mortgage Bank Ltd.,

(4) Kerala State Co-operative Consumers Federation Ltd.,

(5) Kerala State Handloom Weavers’ Co-operative Society Ltd.,

(6) Kerala State Co-operative Rubber Marketing Federation  Ltd.,

(7) Kerala State Co-operative Marketing Federation, Ltd.

(8) State Co-operative Union, Kerala.

1. KERALA STATE CO-OPERATIVE BANK - SPECIAL FEATURES TO BE LOOKED INTO BY THE AUDITOR

(1) Maintenance of liquid assets :- Maintenance of minimum liquid assets and cash reserves is regulated by the provisions of  Banking Regulation Act/Reserve Bank of India Act. The Auditor has to ensure that the relevant statutory provisions are adhered to on a day to day basis.

(2) Maintenance of average daily cash balance :- Section 42 of the Reserve Bank of India Act, 1934, prescribes the average daily cash balance to be maintained by the Apex Bank. It should be ascertained in audit whether the bank has complied with the provisions of the Act with regard to the maintenance of average daily cash balance. Since the minimum of the average daily cash balance has to be invested in the Reserve Bank of India, its proper investment may also be watched by the auditor.

(3) Reserve Bank of India Scheduled Bank’s Regulation 1951 :- It may be it sured in audit whether the Bank has strictly adhered to the requirements of the Scheduled Bank’s Regulations 1951.

(4) Maintenance of State Partnership Fund :- The proper maintenance and operation of Principal State Partnership Fund should be watched in audit. Since Government are eligible to get dividend on such investment, the Auditor has to ensure proper arrangements for the timely collection of dividend from societies in which shares have been taken, and for the prompt remittance of dividend to Government.

(5) Maintenance and operation of Agricultural Credit Stabilisation Fund:- Strict observance of the Rules for the maintenance and operation of Agricultural Credit Stabilisation Fund, by the Bank, should be ensured.

(6) Watching of Utilisation of funds :- It may be verifed whether the Apex Bank had utilised properly the funds received from the Reserve Bank of India. Government and Government institutions like National Co-operative Development Corporation, Agricultural Refinance and Development Corporation, Industrial Development Bank of India etc.

(7) MAS, ASCOF :- It may be ensured whether the transaction made by the Bank under.MASK, ASCOF etc. are according to the Rules formulated under those schemes. The Auditor may also ensure periodical reconciliation of accounts with the other member Banks which joined the scheme.

(8) Inspection of member Societies/Banks and brances :- Periodical inspection of the indebted societies/District Banks and brances of the Bank timely rectification of defects pointed out and implementation of suggestions should be ensured.

(9) Reconciliation of branch accounts :- Periodical reconciliation of branch accounts with head office account, should be ascertained.

(10) Developmental activities :- Being the apex institution for the credit societies in the State it has to evolve new and attractive development schemes intended for the advancement of the movement at large. The Auditor may ascertain how far the bank has succeeded in implementing the scbemes of Co-operative development in the agricultural and rural sectors and the developmental role played by it in achieving its objectives. The steps taken by the bank for credit planning, training of the staff etc., have yto be critically viewed by the Auditor.

(11) Credit Authorisation Scheme for Co-operative Banks :- The Auditor has to ensure that the bank has strictly followed the directions of the Reserve Bank of India in cases of advances, if any made, and which come under the purview of this scheme.

2. APEX CO-OPERATIVE HOUSING SOCIETY

(1) The funds raised by the Apex Society from LIC and other sources are utilised for issuing loans to their members on whose behalf loans are sanctioned by the Apex Society. Since the rate of interest on borrowings varies from time to time, the Auditor has to verify the original sanction order and agreement executed between the Apex Society and LIC and see that the Apex society does not levy interest in excess of the allowed rate.

(2) Debentures are floated only with permission of Reserve Bank of India and Government. The Auditor should examine the condition of sanction and see whether they have ben complied with. A sinking fund has also to be created by the society for redemption of the debenture. This fund is to be invested as per direction of Government/Registrar of Co-operative Societies.

(3) The Apex Society is maintaining separate loan account for each loan. The Auditor should go through the individual accounts and see whether penal interest and interest as levied are within the maximum rates prescribed.

(4) As per directions of L.I.C. a compulsory Group Insurance Scheme had been implemented for the benefit of the borrowers. The Auditor has to examine whether the society maintains groups insurance scheme, currently. The Auditor should see that the Apex Society collects promptly the G. I premium from the primaries.

(5) The Apex Society is a member of the National Co-operative Union of India. Hence, when statutory reserves are made out of the net profit, 1% of the proit should be provided for giving annual subscription of NCUI.

(6) The Auditor has to check whether any of the Directors of the Apex Society representing Primary Society has committed default at any time in his own loan in the Primary Society or whether the Primary Society concerned has at any time defaulted to the Apex Society.

3. AUDIT OF KERALA CO-OPERATIVE CENTRAL LAND MORTGAGE BANK

Special aspects to be looked into by the Auditor.

The funds required for the issue of long term loans are raised by floatation of Debentures in the open market. Loaning programme and Debenture programme for each year are prepared in advance and got approved by the Government and the Reserve Bank of India. Before floatation of debentures, the Central Land Mortgage bank has to acquire through  the Primary Banks unencumbered mortgages for the amount covered by the proposed debentures. For acquiring such mortgages loans are advanced by drawing on the cash credit accommodation provided by the  Kerala State Co-operative Bank, the State Bank of  Travancore or by any other commercial bank, as the case may be. The funds raised through debentures are to be remitted to the cash credit accounts.

As the floatation of debentures is for long periods the Bank has to create a Debenture Redemption Sinking Fund. With the above objects in mind the auditor has to scrutinise the following aspects.

(i) Whether the Bank has obtained sanction of competent authorities for the Floatation of debentures and whethe the conditions of sanction have been complied with in floating the debentures. It should also be ensured whether the Bank has acquired adequate unencumbered mortgages before each series of debentures are floated.

(ii) Whether the Debenture Redemption Sinking Fund is constituted according to the norms prescribed and whether such funds are invested properly. It has also to be verified whether amounts under Sinking Fund are withdrawn without the specific sanction.

(iii) It has to be verified whether to Bank has taken timely and effective action for the reasilisation of overdue loans both at the Central Bank and Primary Bank levels.

(iv) The Auditor has to assess to Bad and Doubtful debts at the end of every year and to see that adequate reserves are created to cover them.

(v) The auditor has to verify the securities held by the bank for the investment of sinking fund etc., and ensure that they are under safe custody.

(vi) The timely receipt of D.V files from the Primary Land Mortgage Banks and their entrustment with the Trustee, have to be watched by the auditor.

(vii) The Auditor has also to verify whether the bank has achieved the target in the loaning programme and, if not, the reasons for the same are to be nvestigated.

(viii) It has to be verified whether the bank has conducted periodical inspection of Primary Land Mortgage Banks and follow up action taken for the timely rectification of defects revealed in such inspections.

(ix) Inspection and reconciliation of branch/Regional accounts

It has to be ensured whether the Head office has undertaken periodical inspection of its Regional Offices and whether the accounts of the Regional/Branch Offices are reconciled at regular intervals.

(x) In addition to the usual reconciliation, the following accounts have also to be reconciled.

(a) Loan due from Primary Land Mortgage Banks.

(b) Branch accounts.

(c) the balance under various heads like shares, sundry deposits, suspense etc., with the Primary Banks.

4. KERALA CO-OPERATIVE CONSUMER’S FEDERATION LTD.

Special features to be looked into by Auditor

1. Purchases

(a) Textiles :- The Federation purchases textiles direct from the mills/wholesale distributors etc. through orders placed to the Representatives of the Mills or on samples received. The details of orders placed are to be verified in the Order Book with receipt of goods from the Mills. The Auditor should check the purchase bill demand draft and relative documents with the day book and the day book with the purchase register, and the purchase bills with the stock register.

(b) Pulses :- Procurement of pulses, is largely effected from the National Co-operative Consummers Federation. As the purchases of pulses and its sales are on commission basis the auditor will check the relative documents to ensure that the Federation has received the Commission on all its sales. The receipt of stock from the National Co-operative Consumer Federation, is entered in the stok register with indication “National Co-operative Consumer Federation, stock” Invoices sent by N.C.C.F. will be checked with the stock register and the purchase register only on the date of sales the goods so sold will be treated as purchase and entered in the purchase register.

In the case of items not available in the National Co-operative Consumer Federation and the purchase of which has been effected from production centres, the auditor will examine the connected files, the market rates etc., to as certain whether the required safeguards have been taken in effecting such purchases.

(c) Retiring of bills :- The auditor should satisfy that all purchase documents, such as R.R. bills/bank intimation etc. are retired only on proper scrutiny with the ‘Order Book’ to ensure that the goods supplied correspond to the orders placed by the federation and after ensuring that they were actually received in the godown. Confirmation may also be obtained from the Mills, to satisfy the accuracy of payment made by the federation and to have a correct reconciliation of the transactions.

It should be verified whether all the purchases were made on proper authority only.

(d) Price fixation

(a) Textiles :- The auditor has to ensure that the percentage of profit charged on textiles are those as fixed by the Managing Committee of the Federation.

(b) Pulses :- It should be ensured that the federation collects daily market intelligence and an active price policy followed strictly. Deviations from the policy may be examined and causes investigated.

Sales :- Usually the Consumer Federation effects sales to the Wholesale Stores on credit basis. The auditor will check the credit sale bills with the day book and with the stock register. Monthly reconcilation of accounts with each Wholesale Store should be ensured.

In the case of sale of confiscated goods, timely submission of statutory returns, if any, clearance from central Excise Department etc., should also be watched.

Manufacturing of Note books/Umbrellas :- It should be ascertained whether entrusting the production of Notebooks/Umbrellas to other agencies was made after observing the usual formalities of inviting quotations etc.

Branches - Reconciliation and Incorporation of accounts :- The Auditor should ensure that the branch accounts are reconciled periodically and promptly incorporated with the main accounts of the Federation, in order to exhibit a fair and correct picture of the transactions.

Internal checking :- It has to be satisfied that a system of internal checking is in vogue and works efficiently.

Submission of Salestax and other statutory returns and remittance of taxes

Timely submission of statutory returns and remittance of salestax to the concerned authorities are to be ensured during audit. Instances of short collection of salestax or othr taxes if any, should be examined carefully and the loss if any, caused to the federation on this account with out satisfactory reasons should be realised from those responsible.

Licences for trading :- The auditor should verify whether licences have been taken by the federation for carrying on different types of trading activities. By doing so the auditor can appraise the institution about the time expired licences, if any, and enable them to renew the licences.

(e) Warrantees for goods :- It has to be ascertained in audit that the facility of warrantees is enjoyed in all cases of bulk purchases of goods to which warantees are offered. If ther was any occasion inflicting any penality on the institution, on account of the non-observance of conditions with regards to warrantees, the auditor has to assess/coomment on the responsibility to the Officers responsible.

Reconciliation of accounts with National Federation/Other institutions :- It may be ensured that the Federation periodically reconciles its accounts with the National Consummers Federation/other institutions to which it has business transactions. Necessary confirmation of outstanding balances should be obtained from them before finalisation of audit.

Purchases in the retail outlets and deparimental Stores :- As far as possible all purchases in respect of retail outlets/departmental stores should be centralised. In effecting ndividual and local purchases to suit the local taste, the retail outlets/departmental stores should have followed the general norms of purchases.

Further, the quantum of purchases should have relation to the stock in possession, sales and rotation ratio. There should also be proper inventory control to attain maximum profitability.

Retirement of Bills :- Retirement of bills received from banks, on account of goods ordered and despatched should be done with due care so that the funds of the institution are not locked up unnecessarily. As far as possible bills should be retired after ascertaining the arrival of goods at station enabling delivery. As delay in retiring of bills within the time limit specified will cause, payment of demurrage etc. Care should also be taken to retire bills within the time. At the same time cash discount, if any, permitted by dealers should not be forfeited simply because of delay in retiring bills.

Provisions for dryage, wastage etc :- Provision if any, made for wastage and dryage should be reasonable and within the limit allowed by competent authorities. If abnormal increase in wastage and dryage is noticed, the auditor should investigate the causes for such abnormal increase and make his observation in the report.

Consignment business - receipt of goods and sales on consignment basis :- In respect of goods received on consignment basis, the relative invoices should be checked with the consignment account. It should be ascertained whether the value of goods received on consignment basis is shown under sundry creditors. The consignment stock outstanding as at the end of the year should have been included in the closing stock of the institution. Prompt realisation of Commission on sales effected should be ascertained in audit. With regard to the accuracy of outstandings under consignment account, necessary confirmation of balance from the consigner should be obtained.

5. KERALA STATE HANDLOOM WEAVER’S CO-OPERATIVE SOCIETY SPECIAL FEATURES TO BE LOOKED INTO BY THE AUDITOR.

1. Purchases :- (a) Affiliated Societies :- The requirements of cloth for sale in the depots as assessed by the Regional Officer, are procured from the affiliated Weavers’ Societies. The purchase invoices, should be accompained by necessary certificates of Quality Control Inspectors of the Industries Department/Technical Supervisors of the Apex Society, as to the correctness of price fixation, marketability quality etc. of the goods while checking purchase invoices, the auditor should peruse these certificates also.

(b) Purchase of Yarn :- Purchase of yarn by the Society will be effected either direct by placing orders with the production centres/Mills, or by negotiation with agents/wholesalers. In order to watch the market rates of each counts of yarn, the society will be maintaining market intelligence on the rates prevailing at Coimbatore and Madurai. It should be ensured that no purchases are effected above the market rates. As far as possible counts which are produced internally should not be purchased from outside agencies. In respect of negotiated purchases the concerned files should also be examined by the Auditor.

The auditor has also to check the stock register of yarns especially with reference to purchase and Sale/issue.

2. Production Centres :- The cost of establishment and other production expenses of the production centre are met by the Head Office. These advances should be adjusted periodically when the concerned production centre submit periodical production statements. It should be ascertained whether all productions made at the centre are transferred to the various depots and accounted in the consolidated stock register. This can be ensured by checking the Goods Receipt statements of the production centre sent to the Head Office with the consolidated stock register.

3. Valuation of closing stock :- In arriving at the value of closing stock, the auditor has to closely follow the directions issued by the Reserve Bank of India, from time to time.

4. Agency depots :- The agreements executed by the Agencies should be verified to ascertain the terms and conditions of granting agency. It is to be ascertained whether Agencies are given without obtaining proper security as prescribed by the society from time to time. By checking the liability register to Agencies, the transfer of goods beyond the maximum permissible limit to the agencies can be located, and the society can be suitably directed to strictly adhere to the Rules.

5. Exhibition :- Participation of the society in the various exhibitions should be based on proper sanction from competent authorities. Wherever, Government provide financial accommodation by way of grant to such exhibitions, the auditor has to watch timely receipt of such assistance as well as its utilisation for the purpose for which it is granted. The stocks in the exhibition depots are also to be adequately insured specifying the venue of the depot in the exhibition.

6. Weavers Training Scheme :- The entire expenses in connection with the Weavers Training Scheme, met by the society in adance is reimbursed by Government subsequently. The auditor has to watch timely reimbursement of such expenses.

7. Reconciliation of branch accounts :- Periodical reconciliation of branches depots accounts with that of Regional Officers, and those of Regional Officers/Head Office should be ensured.

8. Depots Outside State :- The accounts of depots outside state have to be reconciled with that of Head Office. The annual stock verification of the depots is conducted through reciprocal arrangement with the Registrar of Co-operative Societies of the concerned State.

9. Hantex Weaver’s Service Centre :- It has to be examined whether the service centre formulates new attractive designs and propogate them among the various affiliated primary societies.

10. Business Results :- The business results of the society may be critifically examined, deficiencies/Short falls if any, pointed out and suggestions for improvement indicated by the Auditor. The Auditor should also make his observations on the depots which are continuously working in loss for ears together.

11. Inspection of Deposits :- The auditor has to ascertain whether the head office exercises proper control over the depots either directly or through the regional offices. Inspection and periodical stock verification of the depots are also to be ensured. He has also to see whether the defects noticed during inspection or shortage if any, in stock, found during verification, are promptly followed up.

12. Insurance :- The Auditor has to ascertain whether all the stocks in depots, godowns etc are adequately insured and policies kept alive by the society.

13. Rebate Scheme :- The auditor has to verify whether the society has submitted its claims for rebate from Government in time and has taken follow up action until the claims are settled.

6. KERALA STATE CO-OPERATIVE RUBBER MARKETING FEDERATION LTD.

Special aspects to be examined by the Auditor

The activities of the Federation are broadly classified into the following heads.

1. Rubber Marketing.

2. Fertiliser Mixing.

3. Soil and leaf testing.

4. Distribution of Chemicals and Fungicides and Aerial spraying.

5. Rubber Processing.

1. Rubber Marketing :- (a) Purchase :- The Federation purchases rubber from member societies estates and dealers and sells the same to the manufacturers or to the State Trading Corporation for export. It has opened sales depots at Bombay, Calcutta etc. It has got a purchase Depot at Trivandrum. Purchases will be effected by the Federation on the basis of contracts entered into by both parties, at the prevailing market rates. The Auditor will verify the diary of market rates maintained by the Federation and see that the purchases effected are not exceeding the rates prevailed in the market. In case, the Federation has effected any purchase at higher rates in order to fulfil any contract entered into with other agencies, the Auditor has to examine those cases, with particular care to satisfy that those purchases were effected in the best interest of the Federation.

The purchases made are weighed at the godown and lot graded and taken to stock. The Auditor has to check the purchase bills with the grading reports prepared by the grader and with the purchaswe register. It should also be ensured that all the purchases made have been accounted for in the stock register. The stock registers maintained at the  godowns are to be recounciled periodically with the stock register maintained at the Head Office.It should also be satisfied that all the purchases have been graded and total of the graded quantity tallies with the purchase bills.

(b) Sales :- Sales are mainly effected through the sales Agents/Branches etc. As goods are transferred from the godowns to sales deposits, the auditor will verify such transfer slips and the files pertaining to the transporting of goods to ensure whether the goods have been transporced on the day of transfer as noted in the stock register. It may also be ascertained that all transfers to the Brances/Sales depots are incorporated in the Branch/Sales depot accounts. This can be checked by verifying the transfer slips with the extract of stock register of branches.

The Auditor should verify the sales agreements executed by the Federation to ascertain whether sales are effected to the utmost advantage of the Federation. In may also be ensured whether all sales are effected through its Agents/Branches. To ensure this the sales invoice may also be checked with the representative order form.

2. Fertiliser mixing :- All purchases of raw materials for this unit are usually made by the Head Office. It may be ensured whether the Federation has observed the usual formalities in effecting such purchases.The auditor should examine the connected records of the mixing unit to see that the wastage of materials incurred in mixing is reasonable and supported by proper authorisiation from competent authority.

3. Soil testing laboratory :- It has to be ascertained whether the laboratory is functioning efficiently and serves the purpose for which it was established. Since each bed mixed at the mixing unit has to be checked at the Laboratory before they are released for sale, the auditor should satisfy that proper checking, has been done at the laboratory as required. The deficiency if any, noticed in the components may help the auditor in investigating the matter further in the mixing unit.

4. Distribution of chemicals :- Fungicides and Aerial spraying: The Federation acts as agent in the matter of distributing chemicals etc., Suppliers will send goods direct to the party who order goods through the Federation and copy of sales bill sent to Federation. It has to be seen in audit that the Federation realises the correct commission due to it as agent.

5. Rubber processing :- Accounting procedure and details of registers to be maintained will be dealt with in the next volume of the Manual.

6. Branch accounts :- The system adopted by the Federation in reconciling the branch. Accounts has to be examined carefully and loop holes, if any pointed out. Periodical incorporation of branch accounts with the main accounts and reconciliation of the accounts has to be ensured.The accounts with the primaries are also to be reconciled periodically.

The auditor has to ensure that dryage/wastage if any, in the stock of Rubber is reasonable and provision made with the approval of the board of Directors subjects to the general guide-lines issued by Registar.

7. KERALA STATE CO-OPERATIVE MARKETING FEDERATION LTD

Special points to be looked into by the Auditor

I. General Marketing

Marketing of Agriculatural Produce :- It may be ensured that the Federation has valid licence for dealing in agricultural produce. On receipt of goods from the primary marketing Co-operative Societies at the godowns, the Federation issues stock receipts to the Primary society on behalf of its members.

The Primary Co-operative Society would be executing an agreement specifying the terms and conditions for sale of produce pledged. The Auditor has to verify this agreement and ensure that the Federation has fulfilled the conditions in effecting the sales. In case, the Federation has advanced loans on the pledge of produce, the Auditor has to ensure that the advance is limited to the percentage of margin specified in the business sub rules, if any adopted. By checking the stock receipt, agreement loan ledger daily and market rates, the Auditor can make sure that advance is issued only on properly pledged produce. He should also verify that the Federation adjusts these advances, on sale of the produce. Realisation of the prescribed comission by the Federation, for effecting the sales, should also be watched.

II Fertiliser Business

The Marketing Federation assess the requirements of Fertilisers of the primaries and places orders with the Fertiliser Agency/Company. The requirements will be supplied to the Warehouses from where the Federation lifts the stock. On supplying the Fertilisers to the warehouses, the Fertiliser Companies, issues receipts. The issues from the warehouses will be regulated by delivery notes/orders of the Federation. The stock register may be checked with the warehouse receipts and delivery orders/notes.

Since the purchases of Fertilisers, in majority cases, are arranged by the Apex Bank on issuing letters of credit, through Bankers, the Federation has to reconcile the fertiliser accounts with the Bank periodically. Where the Federation effect, purchases on cash down basis, the auditor may ascertain that the allowable commission has been realised in time.

III. Distribution margin payable to Government

It should be ascertained whether the stock of pool fertiliser has been kept separately. It may also be verified whether the Federation sells the pool fertiliser at the rates fixed by Government from time to time, and margin payable to Government is remitted within the time limit, if any specified.

IV Branches/Depots

The sale of agricultural produce by Brances/Depots were undertaken through approved agents. The Auditor has to ensure approval of Agencies by the Board of Director, for sales through them. The Bank guarantee executed by the Agents may also be verified.

The periodical incorporation and reconciliation of branch/Depot accounts with Head office account is also to be ensured.

V. Export Sales : Pepper

Export sales are usually done through the agents at Bombay. The auditor may peruse the connected files and ascertain that export sales are done at favourable conditions only.

VI. Special schemes Cashew procurement scheme etc.

The State Government may entrust the Federation with the monopoly procurement of certain crops. The Auditor has to study the scheme in detail and ensure that the schemes are implemented as agreed upon. It should also be ensured that the Federation maintains separate accounts in respect of each scheme. The working results of each scheme should be certically examined by the auditor and suggestions if any, for improvement given.

Since the Federation deals with mainly agricultural produce, dryage/shrinkage etc., in stock may be an unavoidable feature. The auditor has to verify the relevant Board resolutions fixing the percentage of dryage/wastage etc., that may be allowed and may comment upon the reasonability of dryage/wastage etc.

VII. Fertilliser mixing unit

The Auditor may study the working of the Feritiliser mixing unit and see that the capacity of the unit is fully utilised at the maximum advantage of the Federation.
VIII. Insurance

The goods in possession of the Federation, both procured and pledged, should be adequately insured. In respect of insurance of goods plerged with the Federation by primary marketing societies for sale at favourable circumstances, the auditor may verify the connected records and see that the premium on insurance has been realised from the member societies.

IX. Inspection of indebted primaries  and brances of the Federation

The Auditor has to ensure that there is  an efficient system in the federation for the periodical inspection of branches and indebted primary societies, and to closely follow up the defects pointed out and suggestions indicated during inspection.

8. STATE CO-OPERATIVE UNION, KERALA

Special features to be examined by the Auditor

1. The State Co-operative Union is established as per section 89 of the Kerala Co-operative Societies Act. The functions of the Union have been specified in Section 91 of the Act.

2. Rule 175 of the Kerala Co-operative Societies Rules, empowers the Registrar to audit or cause to audit the accounts of the Circle Co-operative Unions and State Co-operative Union, free of cost. The audit of Circle and State Co-operative Unions, shall include the verification of cash balance and securities and a valuation of the assets and liabilities and on assessment as to whether the activities of the Unions have been conducted fairly and honestly.

3. Membership :- As per section 90 of the Act, every Co-operative Society shall get itself a ffiliated to the Union within six months of its registration. The auditor may ascertain whether the Union collects sufficient data in respect of newly registered Co-operative Societies and pursue action for their affiliation. He may also ensure that affiliation/renewal fees are collected promptly and accounted properly. In respect of contribution of affiliation/renewal fees to the Circle Co-operative Unions, proper receipts should be obtained and filed. Such receipts should also be verified by the Auditor.

4. Member Education Programme :- The member education programmes are mostly financed by Government. The auditor has to verify the connected programmes and relative Government orders sanctioning financial assistance for the same and ensure that they are properly disbursed to the beneficiaries and utilisation certificates forwarded to the competent authorities. It is also to be ascertained whether the unutilised portion of the assistance, has been refunded in time.

5. Education Fund - Utilisation of :- As per Rule 53 (2) (c) f the Kerala Co-operative Societies Rules, Education fund has to be utilised for the furtherance of Co-operative Education including propoganda. In view  of  the fact that the utilisation of the fund is governed by the provisions of Act and Rules and Regulations framed  by the Union and approved by Government the auditor has to ensure that they are complied with strictly.

6. Training Centres and Colleges Incorporation of accounts :- The Training Centres and Co-operative Colleges conducted by the Union are maintaining separate accounts. It may be ensured that the Union periodically reconcilies the accounts with that of the training Centres/Colleges. Periodical incorporation of those accounts with Head office account may also be ascertained in audit. Wherever there are special schemes to give stipend to the participants of the courses, the auditor has to ensure that the disbursements of those assistance are made to the actual beneficiaries.

7. The auditor may also ascertain whether the Head office conducts periodical inspection of the training centres/colleges and defects, if any, noticed were communicated and close follow up action pursued. He may also peruse a few inspection files and point out deficiencies if any with suggestions for improvement.

8. Publicity and Propoganda :- With a view to propogate the Co-operative principles and ideals to give the required publicity for the Co-operative activities and for the furtherance of the cause of co-operation etc. the Union may undertake publication of journals and other periodicals. The auditor may scrutinise the accounts of such publication and ensure that proper accounts and records are maintained for the same and expenses incurred are reasonable. In the case of Film Unit, maintained by the Union, the auditor may examine that the procedure followed in effecting purchase of films etc. Deficiencies, if any, are to be pointed out in audit.

9. Seminars and Conferences :- The union may be conducting Seminars and Conference to discuss and formulate policies for the development of the movement. For this, the Union may be giving advances to the sponsors  of the function. In such cases, the auditor may scrutinise the individual accounts of the Seminary/Conferences and ensure that the advances are promptly adjusted with proper vouchers etc. He may also ensure that such Seminars and Conferences are conducted on proper sanction.