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

Mehta & Associates audit Greenfield Cooperative Sugar Mill Ltd., a cooperative society. In planning the audit, the team wants to identify the primary source that governs the audit and the appointment of auditors for the society. Which is the correct approach?

The auditor should refer to the Cooperative Societies Act and rules of the relevant State, plus the society's bye-laws, for appointment and statutory requirements, while conducting the audit under the Standards on Auditing. The Companies Act and LLP Act do not govern a registered cooperative society.

  1. ARefer to the Cooperative Societies Act and rules of the State under which the society is registered, along with its bye-laws, and apply the Standards on AuditingCorrect
  2. BApply only the Companies Act, 2013 because all entities with share capital are covered by it
  3. CApply only the bye-laws, because Standards on Auditing do not apply to cooperatives
  4. DApply the LLP Act, 2008 because societies are collective entities

Explanation

A cooperative society is governed by the Cooperative Societies Act of the State (or the Multi-State Act) and its bye-laws, which prescribe audit and auditor appointment. The Standards on Auditing still apply to the conduct of the audit. Restricting to bye-laws alone or using the Companies Act or LLP Act is wrong.

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