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CA Intermediate · Auditing and Ethics · Special Features of Audit of Different Type of Entities

CA Meera is auditing Shree Ganesh Co-operative Housing Society, which has no statutory audit requirement under the Companies Act. The society's bye-laws and the State Co-operative Societies Act require an annual audit by a qualified auditor. Which statement best describes the basis of her audit and reporting?

The audit of a co-operative society is governed by the State Co-operative Societies Act and its rules, which prescribe the report format and matters. The auditor still applies the Standards on Auditing, since they cover all audits of financial statements, not only company audits.

  1. AThe audit is governed by the Companies Act, 2013 and she must report under section 143(3) of that Act
  2. BThe audit is governed by the State Co-operative Societies Act and rules, and she reports in the format and on the matters prescribed there, applying the Standards on AuditingCorrect
  3. CStandards on Auditing do not apply because the entity is not a company
  4. DShe need not report on the books of account because societies are exempt from maintaining them

Explanation

A co-operative society is audited under its governing State Act and rules, which prescribe the audit report content. The Standards on Auditing still apply to every audit of financial statements. Option A is wrong because the Companies Act does not govern societies; option C wrongly assumes SAs apply only to companies.

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