Kerala cooperative sector to embrace national audit standards; move likely to reduce losses
Thiruvananthapuram: The cooperative banks and societies are set to revise their audit methodology in accordance with national audit standards. The 50-year-old cooperative audit manual of Kerala will be modified to accommodate these changes. It is anticipated that implementing timely adjustments will reduce losses.
The proposal includes introducing an audit methodology based on "NPA" (Non-Performing Asset) in cooperative banks, similar to that used in financial institutions under the control of the Reserve Bank of India.
It may be noted that all states except Kerala conduct audits based on the NPA criteria. According to the NPA methodology, a reserve amount needs to be set aside only for loans overdue by more than 90 days, along with the related interest return.
Kerala has been following the "Bad and Doubtful Debt" criteria during audits and Kerala-based cooperatives lack relaxation of NPA method. As a result, various societies will be required to set aside a substantial reserve amount, which could lead to financial losses.
Furthermore, auditors in the cooperative department in Kerala do not have a standardised method for preparing working sheets and audit programmes. It is proposed that these be revised in accordance with the audit standards followed by the Comptroller and Auditor General (CAG).
An eight-member expert committee has been appointed by the cooperative department to examine matters that require revamping.
Eight-Member Committee
- Two chartered accountants with expertise in accounting and auditing standards, both of whom have at least three years of experience in conducting financial audits.
- Two officials with at least five years of service in the supervisory cadre at state and district banks, who possess expertise in accounting and auditing standards.
- Two retired officials from the state audit department, who have experience in conducting financial audits across five establishments.
- The Additional Registrar (Credit) of the cooperative department.
- The Additional Audit Director of the cooperative department.