The Ministry of Cooperation has notified the Multi-State Co-operative Societies (Auditor’s Report) Order, 2026 (MSCARO 2026), introducing a comprehensive audit reporting framework for Multi-State Cooperative Societies (MSCS), with detailed checks on governance, financial transactions, statutory compliance, member protection, fraud and cybersecurity.
Issued under Section 73(6) of the Multi-State Co-operative Societies Act, 2002, the order requires societies covered by the framework to get their accounts and activities audited by an auditor and submit a duly signed and verified report in Form X to the Central Registrar of Cooperative Societies (CRCS), along with their audited statement of accounts, as part of the annual return under Section 120 of the Act.
The order will be implemented in phases. In FY 2027-28, it will apply to societies whose gross receipts exceeded Rs 1,000 crore in FY 2026-27, or whose aggregate deposits and borrowings, or loans and advances, exceeded Rs 1,000 crore at any time during that year.
From FY 2028-29 onwards, the threshold will be reduced to Rs 250 crore, based on the corresponding financial parameters in the immediately preceding financial year. Exceeding any one of the three thresholds will bring a society within the order’s scope.
Form X requires auditors to examine board composition under Section 41, including representation of Scheduled Castes and Scheduled Tribes, women and co-opted directors.
The report must also cover directors’ disqualification, timely conduct of annual general meetings, quarterly board meetings and the functioning of statutory committees, including the Audit and Ethics Committee and the committee dealing with prevention of sexual harassment at the workplace.
The framework also requires scrutiny of compliance with Cooperative Ombudsman orders, including refunds, penalties and compensation, as well as complaint resolution and appeals. Auditors must verify grievance redressal mechanisms, the appointment of a Co-operative Information Officer and compliance with the prescribed 30-day timeline for responding to members’ information requests.
The order mandates concurrent audits for societies with annual turnover or deposits exceeding Rs 500 crore, through auditors appointed from the CRCS-approved panel. Other checks cover statutory returns, related-party transactions, anti-money laundering compliance, property records, inventory verification and asset revaluation.
Financial scrutiny extends to loan documentation, collateral security, overdue loans, non-performing assets (NPAs), provisioning, deposit and borrowing limits, repayment defaults and the use of term loans for sanctioned purposes. Auditors must also verify investment compliance under Section 64 of the Act.
The prescribed format further covers restrictions on profit distribution, transfers to reserves, contributions to political parties, applicable cooperative funds, fraud, benami property proceedings and cybersecurity controls, including data backups, access controls, firewalls and reporting of cyber incidents.
Through this standardised framework, MSCARO 2026 seeks to strengthen audit accountability, improve regulatory oversight and help the CRCS identify compliance gaps across covered Multi-State Cooperative Societies.
