CA CHANDRASHEKHAR IYER

A cooperative society means, a society registered

or deemed to be registered under any law
relating to cooperative societies for the time
being in force in any State or under the Central
act.
} State Act :
The societies whose main objective is to serve the
interests of its members in a particular State, are
governed by the Cooperative Societies Act of that
State.
} Central Act :
While, a Society whose main objectives is to serve the
interests of its members in more than one State, are
governed by the Multi-­‐State Cooperative Societies
Act, 2002
} The  Maharashtra  Co-­‐operative  Societies  Act  ,  1960  
(MCS  Act,  1960)
} Maharashtra  Co-­‐operative  Societies  Rules,  1961  
 What  are  accounting  standards?

Are policy documents covering the aspects of

recognition, measurement, presentation and
disclosure of accounting transaction in the financial
statements.
Accounting standards describes the accounting
principals, valuation techniques and methods of
applying the accounting principals in the preparation
and presentation of financial statements so that they
may give a true and fair view.
Who  has  set  these    accounting  standards?

The ICAI has set up an Accounting Standard Board

who have issued accounting standards and
standards of auditing practices.

Objective of accounting standards

•To standardize the diverse accounting policies and

practices with a view to eliminate to the extent
possible confusing variations in the accounting
treatment used to prepare financial statements

•To ensure correct accounting treatment

} No.CSL.2014/C.R.54/13C,dated 6th May 2014
Considering the need to harmonize diverse accounting
policies and practices and also considering above legal
requirement and in exercise of the powers conferred
by clause (iv) of sub-­‐rule (4) of Rule 69 of the
Maharashtra Co-­‐operative Societies Rules, 1961, the
Government of Maharashtra hereby notifies
“Accounting Standards issued by ICAI, New Delhi are
applicable to Co-­‐operative Societies and co-­‐operative
banks
AS  No Details
AS1 Disclosure  of  Accounting  Policies
AS2 Valuation  of  Inventories
AS3 Cash  Flow  Statements
AS4 Contingencies  and  Events  Occurring  after  the  Balance  Sheet  
Date
AS5 Net  Profit  or  Loss  for  the  Period,  Prior  Period  Items  and  
Changes  in  Accounting  Policies
AS6 Depreciation  Accounting
AS7 Construction  Contracts
AS9 Revenue  Recognition
AS10 Accounting  for  Fixed  Assets
AS  No Details
AS11 The  Effects  of  Changes  in  Foreign  Exchange  Rates
AS12 Accounting  for  Government  Grants
AS13 Accounting  for  Investments
AS14 Accounting  for  Amalgamations
AS15 Employee  Benefits
AS16 Borrowing  Costs
AS17 Segment  Reporting
AS18 Related  Party  Disclosures
AS19 Leases
AS20 Earnings  Per  Share
AS21 Consolidated  Financial  Statements
AS  No Details
AS22 Accounting  for  Taxes  on  Income
AS23 Accounting  for  Investments  in  Associates  in  
Consolidated  Financial  Statements
AS24 Discontinued  Operations  
AS25 :  Interim  Financial  Reporting
AS26 Intangible  Assets
AS27 Financial  Reporting  of  Interests  in  Joint  Ventures
AS28 Impairment  of  Assets
AS29 :  Provisions,  Contingent  Liabilities  and  Contingent  
Assets
AS30 Financial  Instruments:  Recognition  and  
Measurement  
AS31 :  Financial  Instruments:  Presentation
AS32 Financial  Instruments:  Disclosures  
} These accounting standards are applicable
mandatorily to different types of Societies as
follows. For applicability, societies are
classified in three different levels
ØLevel  1
ØLevel  II
ØLevel  III
Level  one   a) Banks  
Societies   b) Societies  whose  turnover  (excluding  other  income)  
exceeds  Rs.  50  crores in  immediately  preceding  
accounting  year
c) Societies  having  borrowing  including  deposits  exceeds  
Rs.  10  crores at  any  time  during  immediately  preceding  
accounting  year.  
Level  Two a) Societies  having  turnover  (excluding  other  income)  
Societies   exceeds  Rs.  1  crore but  does  not  exceed  Rs.  50  crores in  
immediately  preceding  accounting  year.  
b) All  societies  having  borrowing  (including  deposits)  
exceeds  Rs.  1  crores but  does  not  exceed  Rs.  10  crores at  
any  time  during  immediately  preceding  accounting  year.  
Level  Three   Societies  not  covered  in  (1)  and  (2)  above  
Societies
1-­‐ Level  one  Societies    -­‐ Applicable  Accounting  Standards  
1,2,3,4,5,6,7,9,10,11,12,13,14,15,16,17,18,19,20,22,24,26,28,
29,30,31,32

2-­‐Level  Two  Societies    -­‐ Applicable  Accounting  Standards

} 1,2,4,5,6,7,9,10,11,12,13,14,15,16,18,19,20,22,24,26,28,29

3.Level  Three  Societies  -­‐ Applicable  Accounting  Standards

} 1,2,4,5,6,  9,10,11,12,13,14,15,16,19,20,22,26,28,29
 What  is  our  role  as  auditors?
ØTo check if the society has followed all relevant accounting
standards
ØIn case of deviation, opine the same in the report
ØProviding audit report under SA 700 –
v Evaluating the appropriateness of the accounting policies
used
v The reasonableness of the accounting estimates made by the
society
v Overall presentation of the financial statement
ØWhen we state the above matter, it is presumed that
v Accounting standards are taken into consideration while
assessing the financial statement.
ØIn case of change of auditor , it is necessary to see if the earlier
years financials comply with the accounting standards before
submitting the audit report.
Ø Accounting  assumptions  :
üGoing  Concern  
üConsistency  
üAccrual  
Ø Disclosure  of  Accounting  Policies
Ø Principal  of  materiality
AS  4  Contingent  Events  &  Event  after  Balance  Sheet  Date  

Ø Events  occurring  after  Balance  Sheet  Date

AS  5  Prior  Period  Items  &  Change  in  Estimates

ØChange  in  an  accounting  policy  v/s.  change  in  accounting  

estimates.  
Ø Prior  period  items  – error  /  omission  /  commission.  
Ø Separate  disclosure  for  prior  period  items.  
Ø Disclosure  for  change  in  accounting  policies  /  estimates.
AS  6  Depreciation  Accounting
Ø The depreciation is an systematic charge of the economic use of
the asset over useful life.
Ø Determination of an useful life and method of depreciation.
Ø Depreciation is provided in majority cases as per rates and
manner under Income Tax Act.
Ø The Co-­‐operative Act is silent on the rates / manner / method
of depreciation.
Ø The disclosure requirement as per AS 6.
Ø Historical cost or other amounts substituted for historical costs
should be disclosed.
Ø Total depreciation for each class of asset must be clearly shown.
Ø Related Accumulated Depreciation also needs to be shown
Ø Are we disclosing the depreciation schedule correctly? When all
these details are to be gives as per the standard.
AS  9  Revenue  Recognition  
ØRecognition  of  sale  of  goods  
ØTransfer  of  significant  risk  and  reward  of  ownership.
ØNo  significant  uncertainty  exists  regarding  amount  of  
consideration.  
ØInterest  is  recognize  on  time  proportion  basis  and  no  
significant  uncertainty  as  to  measurability  and  collectability  
exists.  
ØRBI  prudential  norms  for  recognition  of  revenue  in  case  of  
substandard,  doubtful  and  loss  assets  – Co-­‐operative  Bank.  
ØRecognition  of  revenue  from  locker  rent,  overdue  interest,  
bank  guarantee  commission  etc.  
ØRecognition  of  revenue  – contribution  from  members  
AS  10  Accounting  for  Fixed  Assets  
ØDetermination  of  Cost  for  Accounting  
ØNon-­‐monetary  Consideration  
ØWhen  a  fixed  asset  is  acquired  in  exchange  for  another  asset,  
its  cost  is  usually  determined  by  reference  to  the  fair  market  
value  of  the  consideration  given.  It  may  be  appropriate  to  
consider  also  the  fair  market  value  of  the  asset  acquired  if  this  is  
more  clearly  evident.
ØAn  alternative  accounting  treatment  that  is  sometimes  used  for  
an  exchange  of  assets,  particularly  when  the  assets  exchanged  
are  similar,  is  to  record  the  asset  acquired  at  the  net  book  value  
of  the  asset  given  up;  in  each  case  an  adjustment  is  made  for  any  
balancing  receipt  or  payment  of  cash  or  other  consideration.  

Examples:  UPS/Computers  &  its  peripherals,  Generating  Sets  etc.

 AS  10  Accounting  for  Fixed  Assets
Ø Revaluation  of  Fixed  Assets:  
Ø An  increase  in  net  book  value  arising  on  revaluation  of  fixed  assets  
is  normally  credited  directly  to  owner’s  interests  under  the  heading  
of  revaluation  reserves  and  is  regarded  as  not  available  for  
distribution  of  dividend.  
ØA  decrease  in  net  book  value  arising  on  revaluation  of  fixed  assets  
is  charged  to  profit  and  loss  statement  except  that,  to  the  extent  that  
such  a  decrease  is  considered  to  be  related  to  a  previous  increase  on  
revaluation  that  is  included  in  revaluation  reserve,  it  is  sometimes  
charged  against  that  earlier  increase.  
Ø It  sometimes  happens  that  an  increase  to  be  recorded  is  a  reversal  
of  a  previous  decrease  arising  on  revaluation  which  has  been  charged  
to  profit  and  loss  statement  in  which  case  the  increase  is  credited  to  
profit  and  loss  statement  to  the  extent  that  it  offsets  the  previously  
recorded  decrease.  
AS  10  Accounting  for  Fixed  Assets

Disclosure:  
The  following  information  should  be  disclosed  in  the  financial  
statements:  
Ø Gross  and  net  book  values  of  fixed  assets  at  the  
beginning  and  end  of  an  accounting  period  showing  
additions,  disposals,  acquisitions  and  other  movements;;
Ø Expenditure  incurred  on  account  of  fixed  assets  in  the  
course  of  construction  or  acquisition;;  and  
Ø Revalued  amounts  substituted  for  historical  costs  of  fixed  
assets,  the  method  adopted  to  compute  the  revalued  
amounts,  the  nature  of  indices  used,  the  year  of  any  
appraisal  made  and  whether  an  external  valuer  was  
involved,  in  case  where  fixed  assets  are  stated  at  revalued  
amounts.
AS  20  Earning  Per  Share
ØApplicable  to  all  levels  of  enterprises  except  diluted  earning  per  
share  not  applicable  to  Level  II  and  Level  III  enterprises.
ØCalculation  of  earning  per  share.
ØEPS  whether  applicable  to  CHS  ???
AS  22  Accounting  for  Taxes  on  Incomes
ØProvision  for  Income  Tax  Liability  
ØNetting  off  of  provision  for  tax  and  Advance  Tax  /  TDS  
for  disclosure.  
ØCalculation  of  Differed  Tax  /  Liability  and  presentation  in  
the  financial  statement.  
ØSpecial  reserve  created  under  Income  Tax  Act  and  
impact  in  differed  tax  calculation  – EAC  opinion  of  ICAI.  
ØIdentification  of  temporary  /  permanent  differences.  
ØDisclosure  of  components  of  differed  tax.
ØWhether  AS  22  is  applicable  to  CHS  
AS  28  Impairment  of  Assets  

The  objective  of  this  Statement  is  to  prescribe  the  procedures  that  
an  enterprise  applies  to  ensure  that  its  assets  are  carried  at  no  
more  than  their  recoverable  amount.  

An  asset  is  carried  at  more  than  its  recoverable  amount  if  its  
carrying  amount  exceeds  the  amount  to  be  recovered  through  use  
or  sale  of  the  asset.  

If  this  is  the  case,  the  asset  is  described  as  impaired  and  the  
society  is  required  to  recognise  an  impairment  loss.  
It  is  also  essential  to  know  when  a  society  should  reverse  an  
impairment  loss  and  make  certain  disclosures  for  impaired  assets.
AS  28  Impairment  of  Assets  
Recognition  and  Measurement  
If  the  recoverable  amount  of  an  asset  is  less  than  its  carrying  
amount,  the  carrying  amount  of  the  asset  should  be  reduced  to  its  
recoverable  amount.  That  reduction  is  an  impairment  loss.  
An  impairment  loss  should  be  recognised  as  an  expense  in  the  
statement  of  profit  and  loss  immediately,  unless  the  asset  is  carried  
at  revalued  amount  in  accordance  with  another  Accounting  
Standard  (see  Accounting  Standard  (AS)  10,  Accounting  for  Fixed  
Assets),  in  which  case  any  impairment  loss  of  a  revalued  asset  
should  be  treated  as  a  revaluation  decrease  under  that  Accounting  
Standard.  
At  each  Balance  Sheet  date  it  should  be  assessed  whether  any  
indication  that  any  asset  may  be  impaired.  If  such  indication  exist  
then  method  through  which  the  recoverable  amount  is  arrived  at
Situations  of  Impairment  losses  in  Co-­‐operatives:  
Plant  or  Machinery/  Equipments  of  Dairy  or  Sugar  Factory.  
Buildings  and  others  movable  assets  .  
AS  29  Provision  for  Contingencies  

Determination  of  Asset  and  Liability  and  Contingent  Liability  

Reasonable  certainty.  
ØProbable  
ØPossible  
ØRemote  

Disclosure  of  movement  of  provisions  

Treatment  of  Contingent  Assets  
Virtual  certainty.  
} No. CSL.2014/CR.53/13 C Dated 12th August
2014.:In exercise of the Powers conferred by
sub –section (2) of section 81 of the MCS Act
1960, the Government of Maharashtra hreby
notifies the auditing standards No. mentioned
in coloumn (2) of the schedule appended
hereto , being auditing standard specified by
the Insititute of Chartered Accountants of
India , and explained in detail in column (3)
of the said schedule to be the standards for
the audit of accounts of the co-op societies
under the said Act.
Sr.No Auditing Name of Auditing Standard
(1) Standard (3)
No
(2)
1 200 Overall objective of the Independent Auditor and the
conduct audit in accordance with the SA
2 210 Agreeing the terms of audit engagements
3 220 Quality control for an audit of financial statements
4 230 Audit documentation
5 240 Auditors responsibilities relating to fraud in audit of
financial statements
6 250 Consideration of laws and regulations in an audit of
financial statements
7 260 Communication with those charged with Governance

8 265 Communication of deficiencies in internal control to

those charged with Governance & Mgt
9 299 Responsibility of Joint auditors
10 300 Planning and audit of financial statements
Sr.No Auditing Name of Auditing Standard
(1) Standard (3)
No
(2)
11 315 Identifying and assessing the risk of material
misstatement through understanding the entity & its
envoironment
12 320 Materiality in planning & performing an audit
13 330 Auditors responses to Assessed risks
14 402 Audit considerations relating to an entity using a
service organisation
15 450 Evaluation of misstatement identified during the
audit
16 500 Audit Evidence

17 501 Audit Evidence – specific considerations for selected

items
18 505 External confirmations

19 510 Initial audit engagements – opening balances

20 520 Analytical procedures
Sr.No Auditing Name of Auditing Standard
(1) Standard (3)
No
(2)
21 530 Audit Sampling

22 540 Auditing accounting estimates including fair value

estimates and related disclosures
23 550 Related party
24 560 Subsequent events
25 570 Going concern

26 580 Written representations

27 600 Using work of another Auditor/s

28 610 Using work of Internal auditors

29 620 Using work of Expert Auditors

30 700 Forming an opinion and reporting on financial
statements
31 705 Modifications to opinion in the Independent auditors
report
Sr.No Auditing Name of Auditing Standard
(1) Standard (3)
No
(2)
32 706 Emphasis of matter paragraphs and other matter
paragraph in Independent auditors report
33 710 Comparative information – corresponding figures and
comparative financial statements
34 720 The auditors responsibility in relation to other
information in documents containing other audited
financial statements
35 800 Audits of Financial statements prepared in
accordance with special purpose framework
36 805 Special considerations – audit of single financial
statements and specific elements accounts or items
of a financial statement
37 810 Engagements to report on summary financial
statements
 DEADLINES  TO  BE  MET  
Rule Details Responsi Deadline
No/Act bility
R61 Preparation of Annual Society 45 days from close of year
statement of accounts – Before 15th May
R69(1)(a) Audit of accounts Society 4th months from close of
/(b year – Before 31st July
R69(3) Submission of audit Auditor Along with audit report
memorandum
R69(4)/ Audit to be carried out Auditor
S81 (2) as per accounting
standards
S 81(5B) Submission of audit Auditor Within 1 month from
report to society completion of audit and in
any case before issuance
of AGM notice
R73/S82 Audit rectification report Society/ 3 months from date of
Auditor audit report – Hard copy
by society and online
submission by auditor