Co-operative Society Audit – Disqualification of Auditors (Multi-State Co-operative Societies Act, 2002)
## Disqualification of Auditors: Multi-State Co-operative Societies Act, 2002
### Qualification (Section 72(1))
Only a person who is a Chartered Accountant within the meaning of the Chartered Accountants Act, 1949 can be appointed as auditor of a multi-state co-operative society.
### Disqualifications (Section 72(2))
The following persons are not qualified for appointment as auditors:
#
Disqualified Person
a
A body corporate
b
An officer or employee of the multi-state co-operative society
c
A person who is a member or in employment of an officer or employee of the society
d
A person indebted to the society, or who has given any guarantee or security in connection with the indebtedness of any third person to the society, exceeding ₹1,000
### Memory Aid — BOME
Body corporate
Officer/employee of the society
Member/employee of an officer or employee
Endebted person (or guarantor) > ₹1,000
Worked example
### Example 1
MTP 4 Scenario: Section 72(1) of the Multi-State Co-operative Societies Act, 2002 states only a CA can be appointed auditor. Who, per Section 72(2), is disqualified?
Answer: Disqualified persons are: (a) A body corporate; (b) An officer or employee of the society; (c) A person who is a member or in employment of an officer or employee of the society; (d) A person indebted to the society, or who has given guarantee/security for a third party's indebtedness to the society, exceeding ₹1,000.
⚠️ Common exam mistakes
Forgetting the ₹1,000 monetary threshold for the indebtedness/guarantee disqualification
Stating only 'body corporate' and 'officer/employee' — missing categories (c) and (d) in exam answers
Confusing these disqualifications with those under the Companies Act — the threshold and categories differ
Not noting that the guarantee or security for a third party's indebtedness also disqualifies
Bare-Act text Section 72(1) and Section 72(2) · Multi-State Co-operative Societies Act, 2002 · click to expand
Section 72(1): No person other than a chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949) shall be appointed as an auditor of a multi-State co-operative society.
Section 72(2): None of the following persons shall be qualified for appointment as an auditor of a multi-State co-operative society, namely:— (a) a body corporate; (b) an officer or employee of the multi-State co-operative society; (c) a person who is a member or who is in the employment, of an officer or employee of the multi-State co-operative society; (d) a person who is indebted to the multi-State co-operative society, or who has given any guarantee or provided any security in connection with the indebtedness of any third person to the multi-State co-operative society, for an amount exceeding one thousand rupees.