# Audit of Multi-State Co-operative Societies (MSCS)
## Important Restriction
Funds of a MSCS cannot be utilised for any political purpose.
## Books of Accounts to be Maintained
Every Multi-State Co-operative Society shall keep proper books of account with respect to:
1. Cash flows - all sums of money received & expended and matters in respect of which such receipts and expenditure take place;
2. Trading - all sales and purchases of goods;
3. Position - assets and liabilities; and
4. Cost records - for MSCS engaged in production, processing & manufacturing, particulars relating to utilisation of materials, labour or other cost items as per bye-laws.
## Qualification of Auditors
A person who is a Chartered Accountant within the meaning of the CA Act, 1949 can be appointed as auditor of a MSCS.
### Persons NOT Eligible for Appointment
- A body corporate
- An officer or employee of the MSCS
- A person who is a partner, or who is in employment, of an officer or employee of the MSCS
- A person who is indebted to the MSCS, or who has given any guarantee or security for indebtedness of any third person to the MSCS for an amount exceeding Rs. 1,000
> Subsequent disqualification: If an auditor becomes disqualified after his appointment under any of the above clauses, he shall be deemed to have vacated his office.
## Appointment of Auditors
### First Auditor
- Appointed by the Board within one month of the date of registration of the MSCS.
- Holds office until conclusion of the first AGM.
- If the Board fails to appoint the first auditor, the MSCS may appoint him in a general meeting.
### Subsequent Auditor
- Appointed by the MSCS at each AGM.
- Holds office from conclusion of that meeting until conclusion of the next AGM.
## Powers and Duties of Auditors
- Every auditor has the right of access at all times to books, accounts and vouchers of the society.
- Entitled to require from officers such information and explanations as he may think necessary.
- Shall make inquiries on 4 points similar to Section 143(1) clauses (a), (b), (e), (f) of the Companies Act, 2013.
## Auditor's Report - Contents
The auditor shall report to members on the accounts examined by him and on every Balance Sheet, P&L and other documents.
He shall state whether financial statements give a true and fair view:
- of the state of affairs of MSCS as at the end of FY (Balance Sheet); and
- of the profit or loss for the FY (Statement of P&L).
The report shall also include statements on 4 points similar to Section 143(1) clauses (a), (b), (c), (d) of the Companies Act, 2013.