Query from Rini Jain

I am Rini Jain from Maharashtra. I have few questions on the cooperative society of Maharashtra.

Firstly giving you a brief of the case-

There are 11 directors of the society including Chairman and secretary. A case is filed on the audit of the year 2014-2015. The audit done was okay in that year but now after a year few people appointed another auditor whose report shows huge loss.

I have two questions –

1. Who will be responsible for fraud?
2. The chairman of the society resigned from the company in February 2015 and hence from the society as well. His signatures are not present anywhere for the entire year and not on the audit report as well. Will he still be responsible for the fraud?

I C Naik

Dear Rini

Is it the case that two auditors audited accounts of the cooperative year 2014-15 (1 4 2014 to 31 3 2015). It could also be that another Auditor was appointed for the cooperative year  2015-16  (1 4 2015 to 31 3 2016). The first Report was not showing losses. But there were huge losses in 2015-16. In February 2015 the Chairman having resigned, for any thing happening during 1 4 2015 to 31 3 2016, the Chairman cannot be held responsible.

I suggest please reorganize the facts after re-checking if an audit trail is required to trace causes of huge losses having occurred during the tenure of the Chairman. This may involve approaching the Deputy Registrar for investigation in to 2014-15 as also looking at auditor’s responsibility of not reporting irregularities as they are so required post amendment to the MCS Act 1960 vide the Maharashtra Cooperative Societies (Amendment) Act 2013.