Audit Division

In terms of the Section 44 (2) (1) of Co-operative Society Act No. 05 of 1972 an independent review on the performance and financial state of Cooperative Societies is submitted by the Department of Co-operative Development and it is distributed among the members at the general meeting. The Department of Co-operative Development arranges for establishment of benefit in the Co-operative Movement and implementation of the government objectives and policies. So, this independent review is conducted in compliance with accounting standards of Sri Lanka, Co-operative Society Act, Rules, Interim Constitutions, Committee orders and Departmental instructions ensuring economy, efficiency and productivity of operations.

Authoritative Power for Auditing

44. (1) Accounts of each Co-operative Society should be audited once a year by the Registrar


Authorized by him by a written document for the purpose.

  • Any officer in the Department of Co-operative Development, or
  • Charted Accountant, or Company of Charted Accountants
  • A person or a board of which the name has been included in the list of auditors maintained by the Registrar

Duty Of The Auditor

(2) In 44(2) of the Co-operative Society Act No. 5 of 1972

In the Audit under sub Section (1) ,

  1. Investigation on expired loans
  2. Estimate and verification on assets and liabilities of registered societies
  3. An examination whether organizational methods, procedures, books, reports and other documents have been designed sufficiently and whether those methods, procedures, books, reports and other documents have been operated productively to ensure submission of information to enable for continuous assessment of proper financial administration and activities of the society
  4. An examination whether running of the society is in compliance to the rules, orders, or provisions of the Act or made under the Act or sub Constitutions, and whether administration of the society has been conducted in compliance to the Act or made under the Act or sub Constitutions
  5. An examination whether the funds have been utilized effectively and economically
  6. An examination whether satisfactory procedures have been devised to ensure the security of money and properties belonging to the registered society and under its administration
  7. An examination whether the accounts, audited relevant to submission of a correct account on the activities of the society regarding the period considered with proper attention on terms of accounts, investment of money and assessment have been planned and
  8. Other due matters should be included.

Power Of The Auditor

Under the sub Section (3) (1) ,

The Registrar or any person authorized to audit should have powers to,

  1. ummon any former or present officer, representative, employee, member or any other person who can provide important information regarding the management on any transactions of the society or activities according to the opinion of the Registrar or the person authorized by him,
  2. order to any former or present officer, representative, employee, member or any other person who was/is in charge of any book, document, any money belonging to the society, security or other property relevant to the activities of the society to submit that,
  3. take accounting books or documents into his custody on an occasion when a fraud is found by him.

According to sub Section (4),

The Registrar or any person authorized by the Registrar by a general or special order in writing should be entitled to get all the books, documents, accounts and documents, securities and cash in hand maintained by a registered society on all occasions. Further, every person who is in charge of the above or maintain them should provide the information to the Registrar or the person authorized by the Registrar when requested.

According to the sub Section (5),

The Registrar and every person authorized by him for auditing accounts in a registered society should be considered as public servants according to the description of the Penal Code.

Power Of Imposing Surcharges

According to the Sub section (6),

  1. If it is found when an audit under the sub Section (1) is going on or at the end that any payment has been made by any person who is/was in charge of organization or management of a Society or is/was an official or employee of a Society contrary to provisions in rules of this Act or rules imposed under any other law or rules or orders approved by the Registrar relevant to Co-operative societies or financial procedures or general orders issued by the Registrar or Co-operative Employees Commission or rules in the provisions in interim Constitutions of the Society or Committee rules of the society such a payment or use of funds should not be allowed by the Registrar. Further, that person should be charged for any deficiency or loss occurred due to his negligence. In addition, the amount should be certified and his decision should be informed in writing to the person.
  2. Before any person is not allowed or make any surcharge he should be given an opportunity to make comments or explanations deemed to be suitable by the Registrar or any person authorized by a document or general or special order and if he is not allowed or make a surcharge the reasons for the decision for not allowing or make surcharge should be given in writing after reasons were requested for that.
  3. In event of an occasion where the activities were not carried out in compliance to the Registrar the provisions stipulated in section 62 (2) are applied with necessary amendments.

Independance In Audit

In terms of sub section of No.72 (a) of 1972

Under this Act when duties of their own are performed or activities are done any civil or crime case cannot be filed against the Registrar, Deputy Commissioner, Senior Assistant Commissioner, Assistant Commissioners or other persons formally authorized by the Registrar under the Sections 44, 46, 49, 66 and 67 regarding any activity done with good faith.

For More Details

Mr. B.M.M. Bandula

Assistant Commissioner (Audit)

Tel: +94 11 243 6852

Mobile : +94 71 834 9332