Short Answer

No, an adverse audit report does not automatically invalidate the budget or decisions of that year.

Detailed Explanation

Rule 89 of the Gujarat Cooperative Societies Rules, 1965 addresses the audit of cooperative societies. This rule mandates that the auditor shall submit a report to the society and the Registrar after completing the audit. An adverse audit report signifies that the auditor has identified discrepancies, irregularities, or non-compliance in the financial records or operations of the society. However, the mere presence of an adverse report does not nullify the budget or decisions taken by the society during that year.

Similarly, Section 81 of the Gujarat Cooperative Societies Act, 1961 empowers the Registrar to issue orders for the audit of societies. If the audit report reveals serious issues, the Registrar may take appropriate actions as per the provisions of the Act and Rules. This could include directing the society to rectify the identified deficiencies or imposing penalties on the office bearers responsible for the lapses.

In practice, an adverse audit report serves as a warning sign for the society to rectify its financial and operational shortcomings. It does not automatically render the budget or decisions invalid. The society must address the concerns raised in the audit report and take corrective measures to ensure compliance with the law and proper functioning.

Practical Examples

• Scenario 1: An audit report of a cooperative society highlights financial mismanagement by the office bearers. Despite the adverse report, the decisions taken during the year, such as approving a budget, remain valid. The society must rectify the financial irregularities to comply with the law.

• Scenario 2: In another case, an audit report points out procedural lapses in the decision-making process of a society. While the report raises concerns, the decisions made during that year are not automatically invalidated. The society needs to address the procedural deficiencies highlighted in the audit.

References

• Rule 89 of the Gujarat Cooperative Societies Rules, 1965

• Section 81 of the Gujarat Cooperative Societies Act, 1961