Short Answer

Donations or grants collected by a society are typically treated as income and should be properly accounted for in the audit.

Detailed Explanation

Section 76 of the Gujarat Cooperative Societies Act, 1961 addresses the audit of cooperative societies. It mandates that every society shall maintain proper accounts and prepare an annual statement of accounts. Donations or grants received by the society should be recorded in the income section of the accounts. During the audit process, the auditor will review these entries to ensure that all income, including donations and grants, has been accurately recorded and accounted for.

Rule 70 of the Gujarat Cooperative Societies Rules, 1965 provides further guidance on the audit process. It states that the auditor shall examine the cash book, bank passbook, and other relevant records to verify the correctness of the financial transactions. Donations or grants should be supported by proper documentation, such as receipts or acknowledgment letters, to substantiate their receipt and utilization by the society.

Practical Examples

• Scenario 1: A cooperative housing society receives a donation from a member for a community development project. The amount is recorded in the income statement under donations received.

• Scenario 2: A cooperative credit society receives a grant from the government for promoting financial literacy among its members. The grant amount is accounted for separately in the audit report under grants received.

• Scenario 3: A cooperative agricultural society receives a donation from a local business for purchasing new farming equipment. The donation is reflected in the financial statements as additional income.

Reference

• Section 76 of the Gujarat Cooperative Societies Act, 1961

• Rule 70 of the Gujarat Cooperative Societies Rules, 1965