Part IXB: The Co-operative Societies

Article 243ZM: Audit of Accounts of Co-operative Societies

Original Article:

(1) The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the co-operative societies and the auditing of such accounts at least once in each financial year.

(2) The Legislature of a State shall, by law, lay down the minimum qualifications and experience of auditors and auditing firms that shall be eligible for auditing accounts of the co-operative societies.

(3) Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of the co-operative society:

(4) The accounts of every co-operative society shall be audited within six months of the close of the financial year to which such accounts relate.

(5) The audit report of the accounts of an apex co-operative society, as may be defined by the State Act, shall be laid before the State Legislature in the manner, as may be provided by the State Legislature, by law.

Explanations:

Article 243ZM ensures financial transparency and accountability in co-operative societies by mandating regular audits. It requires co-operatives to maintain accounts, appoint qualified auditors, and adhere to strict timelines for completing audits and submitting reports.

Clause-by-Clause Explanation:

Clause (1): Empowers state legislatures to ensure co-operative societies maintain proper accounts and conduct annual audits. Example: Maharashtra mandates audits under its Co-operative Societies Act.

Clause (2): Defines minimum qualifications for auditors, ensuring professional standards. Example: Karnataka requires certified accountants for auditing large co-operatives.

Clause (3): Mandates that auditors be appointed by the general body from a state-approved panel to ensure transparency and impartiality.

Clause (4): Stipulates a six-month timeline for completing audits, ensuring timely financial reviews.

Clause (5): Requires apex societies’ audit reports to be presented before the state legislature, promoting higher accountability.

Historical Significance:

Article 243ZM, introduced by the 97th Amendment, was a significant step towards ensuring financial discipline in co-operatives, reducing fraud, and enhancing public trust.

Legislative History:

Part IXB was added to the Constitution to bring uniformity and accountability in co-operatives across India, particularly in financial management and governance.

References:

• The Constitution (97th Amendment) Act, 2011.
• State laws like Maharashtra Co-operative Societies Act.
• Case studies on co-operative audits in India.