Short Answer

Auditors must remain independent and are not permitted to prepare the accounts they audit.

Detailed Explanation

Section 81 of the Gujarat Cooperative Societies Act, 1961 states that the auditors appointed under this Act shall have the right to access all books, accounts, and vouchers of the society. This means that auditors are responsible for verifying the accuracy and completeness of the financial records of the cooperative society. They are expected to provide an unbiased opinion on the financial statements without being involved in their preparation.

Rule 63 of the Gujarat Cooperative Societies Rules, 1965 further emphasizes the independence of auditors by outlining the duties and responsibilities of auditors. It specifies that auditors should conduct their audit in accordance with the auditing standards and guidelines prescribed by the Registrar. This rule ensures that auditors maintain objectivity and integrity in their audit process.

In practice, auditors play a crucial role in ensuring transparency and accountability within cooperative societies. By remaining independent and impartial, auditors can provide an objective assessment of the financial health and compliance of the society. This independence is essential to maintain the credibility of the audit process and to uphold the trust of the members and stakeholders.

Real-world Scenarios

• Scenario 1: An auditor appointed by a cooperative society discovers discrepancies in the financial records during the audit process. The auditor must report these findings accurately without any bias, highlighting the importance of independence in the audit.

• Scenario 2: If an auditor is found to be involved in preparing the accounts they audit, it could lead to conflicts of interest and compromise the integrity of the audit. This highlights the significance of auditors maintaining independence in their role.

• Scenario 3: Auditors are required to adhere to ethical standards and professional conduct to ensure the credibility of their audit reports. By remaining independent, auditors can uphold the principles of transparency and accountability in cooperative societies.

References

• Section 81 of the Gujarat Cooperative Societies Act, 1961: Official PDF

• Rule 63 of the Gujarat Cooperative Societies Rules, 1965: Official PDF