Audit of an association

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Benjamin Thomas (Querist)
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13 January 2016 This query is related to the audit and the byelaw of a Apartment Association.
All the flat owners are members of the association and paid the maintenance deposit/membership fee of Rs 25000 at the start of the Association and by thus, all flats are the members.. But the Association is collecting Rs25000 from new buyers as membership fee, again without a clause in the Byelaw. Our accounts are audited by a qualified Chartered Accountant. We are planning to request our Auditor, not to allow the Association, to account such income under the head “Membership Fee”. Because there is no provision in the Byelaw for a second membership. We want to know whether the audit is only to check the income /expenses vouchers or based on the byelaws.Kindly advise.

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Guest (Expert)

20 January 2016 Audit should be done not just checking income / expenses but also compliance with byelaws. Consequently, if the auditor is brought to attention of the fact that the membership is being collected contrary to the bye laws, he should put the negative report in this audit report and based on that report, the members can take legal action against the association. But for that the auditor should be made aware by members / affected party.

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