Ca Audit Must For Scheduled Co-Op Banks

The state co-operative department has decided that the statutory audit of scheduled urban co-operative banks (SUCBs) is to be conducted by chartered accountants (CAs) from the current financial year.

Till now, audit of these banks used to be conducted by the office of the state commissioner and registrar of co-operatives.

The department has taken this step as the post-mortem of the books of co-operative banks conducted by the office of the registrar -- which does not have enough qualified manpower -- is not up to the mark.

The departmental auditors reportedly functioned in a perfunctory manner even though the Reserve Bank of India (RBI) depends on them for certification of the co-operative banks' books.

 

"As the audit fees charged is quite attractive the registrar's office did not let the function of statutory audit of accounts get out of its hands all these years. Only for a year in the early '90s did the department employ the services of empanelled CAs for audit," said a senior banker.

For instance, a SUCB with a working fund (read deposit base) of Rs 1,000 crore, the fees work out to be Rs 11,30,000.

Against this, a similar-sized multi-state co-operative bank has to shell out Rs 4,25,000 to a CA firm appointed by the central registrar of co-operatives, while a commercial bank has to pay only Rs 2,17,000 to a CA firm appointed by RBI.

In fact, a few co-operative banks had filed a petition in the early 90s in the Mumbai High Court against the stiff audit fees. But even after a decade the fate of the case is still undecided.

Majority of the co-operative banks call for annual general meetings only after obtaining an audit certificate. The certificate, which also indicates the audit class of the bank -- either A, B or C -- is one of the barometers of the financial strength of a bank.

The registrar's office has already appointed auditors for the SUCBs, which have a deposit base of over Rs 100 crore, for two years.