Audit of cooperative societies and applicability of AS

Discussion in 'Audit' started by gauri, Feb 2, 2014.

  1. gauri

    gauri New Member

    The client is a co.operative housing society registered under Maharashtra co.op.societies ' act situated in a suburb of Thane.As a normal course of activity the society looks after maintenance of society building and discharging its obligations towards municipality. The society collects funds from its members under various heads like,service charges,non occupancy charges,electricity,water ,property tax insurance and parking charges.The society has two wings A& B and there are 20 members occuying these flats. The society use these funds to meet all the expenses.However the collection and expenses have a mis match.In certain cases there are surplus and in some cases there are deficits.The society's account as on 31st march 2010 show the following: account head collection expenses(including provision) property tax 51,156 7200 water charges 54,000 46850 In the case of insurance,the society has collected Rs. 2,640 against a payment of Rs. 6545. All these items are shown in the income & expenditure account and the society had shown a surplus of Rs. 47217. The following questions need to be answered: As there is a specific collection for property tax and also payment is made against this collection is it correct to recognise the excess amount collected as "income"? similar is the case for water charges and electricity charges. It is pertinent to note that the society has not so far passed any resolution that the excess amount in one head can be offset against the otherhead which is having deficit. By recognising a "liability" as an income whether the society has violated AS9 of the accounting standard. If the society is willing to transfer the surplus amounts after meeting the obligations like electricity,water charges & property taxes to a separate account under the current liabilities in the current year what it should do for the past 6 years where in the surpluses were recognised as income of those years by the society? For the past 4 years the society has been incurring losses even after taking in to account these surplus amounts.In the current year 2009-10 the society has shown marginal surplus of Rs. 47,217.

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