Co=operative socities audit and applicability of as

Stat Audit 469 views 2 replies

gauri

student

114 Points Joined April 2011

The client is a co.operative housing society registered under Maharashtra co.op.societies ' act situated in a suburb of Thane.As a normal course of activity the society looks after maintenance of society building and discharging its obligations towards municipality. The society collects funds from its members under various heads like,service charges,non occupancy charges,electricity,water ,property tax insurance and parking charges.The society has two wings A& B and there are 20 members occuying these flats. The society use these funds to meet all the expenses.However the collection and expenses have a mis match.In certain cases there are surplus and in some cases there are deficits.The society's account as on 31st march 2010 show the following: account head collection expenses(including provision) property tax 51,156 7200 water charges 54,000 46850 In the case of insurance,the society has collected Rs. 2,640 against a payment of Rs. 6545. All these items are shown in the income & expenditure account and the society had shown a surplus of Rs. 47217. The following questions need to be answered: As there is a specific collection for property tax and also payment is made against this collection is it correct to recognise the excess amount collected as "income"? similar is the case for water charges and electricity charges. It is pertinent to note that the society has not so far passed any resolution that the excess amount in one head can be offset against the otherhead which is having deficit. By recognising a "liability" as an income whether the society has violated AS9 of the accounting standard. If the society is willing to transfer the surplus amounts after meeting the obligations like electricity,water charges & property taxes to a separate account under the current liabilities in the current year what it should do for the past 6 years where in the surpluses were recognised as income of those years by the society? For the past 4 years the society has been incurring losses even after taking in to account these surplus amounts.In the current year 2009-10 the society has shown marginal surplus of Rs. 47,217.

Read more at: /forum/co-op-society-audit-amp-accounting-standards-122782.asp#.Uu58IvmSy8r

PS: REPOSTING THIS QUERY AS IT WAS PREVIOUSLY UNANSWERED. THE QUERY DOES NOT BELONG TO ME HOWEVER I WULD LIKE TO KNOW THE SOLUTION FOR THE SAME.

Replies (2)

CA Saroj Kumar

Keen to learn something new every moment

2588 Points Joined June 2010

Dear mam As per ur question explanation and to the extent i have understand and my knowledge With every statutory obligation there is one condtion attached generally that If any amoount collected more then the required amount then the amount so collected are require to be paid forthwith in the account of Government. So would to tel you that u should first check wether they can book the excess receipt as income or not by refering the respective Act's Like Elcetricty Act, Service Tax.

Secondly irrespective of resolution passed by the entity it can not be available to the enity that the excess income can be recognised as Income in the Books.

Bcz these are specific collection on behlaf of Government hence it can not be treated as Income in the hands of entity.

As per As -9 Income should be recognised only if following conditions are satisfied.

According to the principle, revenues are recognized when they are realized or realizable, and are earned (usually when goods are transferred or services rendered), no matter when cash is received.

since the collecting the charges form member does not include in nature of trading in ordineary sence of business. and also it is not the business of entity hence it can not be recognised and income in the books.