CONTENTS

CHAPT

TOPIC

PAG

ER

NO.

NO.

1.

Introduction

2-4

2.

Book of account to be maintained

5-7

3.

Advantage and disadvantage of co-operative

8-12

society
4.

Formation of co-operative society

13-27

6.

Comparative balance sheet

28-31

7.

Conclusion

32-33

BIBLIOGRAPHY

34-35
CHAPTER 1

INTRODUCTION TO CO-OPERATIVE SOCIETY

 MEANING

A co-operative Society is a body corporate with perpetual

succession. It can acquire, hold and dispose off properties, enter
into contracts and it can sue and it can be used. In the state of
Maharashtra a society is formed, regulated and governed and
controlled by the Maharashtra Cooperative Societies Act, 1960.
(Section 36 of M.C.S. Act, 1960).All the Co-operative Societies
have to maintain the records as per the Maharashtra Co-operative
Societies Act, 1960, M.C.S.
Rules, 1961 and the Byelaws of the Society.

NON-PROFIT ORGANISATIONS

There are certain institutions whose main aim is not to earn profit.
They are established to provide services and their sole motto is to
render services, e.g., schools, libraries, sports clubs, hospitals and
professionals like, doctors, lawyers, chartered accountants,
company secretaries and co-operative housing societies, etc.
Though the main aim of these bodies is not to earn profit but still
they are interested in knowing whether their current income is more
than the current expenses or not. They are also keen in knowing the
financial position of their concern. Cooperative Societies are not
3

charitable societies. They carry on Economic Activities. The profit

is not the motive but the proper accounts need to be maintained and
presented before the members for their approval in the Annual
General Body meeting. The same need to be properly audited as per
the provisions of the Act.

CO-OPERATIVE YEAR

Earlier the accounting year for Societies was a year ending on 30th
June or other day fixed by a particular society with the Approval of
the Registrar. However, with the amendment made in 1993, the Cooperative year has been compulsorily made to end on 31st day of
March.

CHAPTER 2
BOOKS OF ACCOUNT TO BE
MAINTAINED

 ACCOUNT

An account is formal presentation of the transactions pertaining to

an item or person or an income or expense. An account is generally
prepared in T form wherein the left hand side is called the debit side
and the right hand side the credit side. All accounts (except the cash
or bank), which are maintained in cashbook, are maintained in
ledger.

ACCOUNTING YEAR

The erotically speaking a business may adopt any period of 12

months as its accounting year except for first accounting year which
may be less or more than a period of 12 months. Under income tax
act however every person is required (W.E.F 1.4.1989) to adopt a
uniform accounting year i.e. financial year, commencing on 1st
April and ending on 31st march next year. Accordingly, since 1993,
the co-operative year also has been changed to Financial Year.

PROVISIONS UNDER BYE-LAWS OF COOPERATIVE HOUSING SOCIETIES

As per bye law no 142 and as per standard accounting principles
following accounts books need to be maintained in respect of the
financial transaction of the society.

a) The cash and the bank book

b) The general ledger
c) The personal ledger (member wise monthly collection register)
d) Bill register (month wise charges register)
e) Expense vouchers with receivers signature, authorization to pass
vouchers and corresponding bill and receipt
f) Monthly /quarterly bills raised on the members for outgoings of
the society.
g) Receipts of the collection of charges transfer fees and other funds
of the society.
h) Bank passbook, check issued with counter files ,pay in slips book
of the bank.

CHAPTER 3
ADVANTAGES &
DISADVANTAGES OF CO
OPERATIVE SOCIETY

A Co-operative form of business organization has

the following advantages:
1) Easy Formation:
Formation of a co-operative society is very easy compared to a
joint stock company. Any ten adults can voluntarily form an
association and get it registered with the Registrar of Co-operative
Societies.
2) Open Membership:
Persons having common interest can form a co-operative society.
Any competent person can become a member at any time he/she
likes and can leave the society at will.
3) Democratic Control:
A co-operative society is controlled in a democratic manner. The
members cast their vote to elect their representatives to form a
committee that looks after the day-to-day administration. This
committee is accountable to all the members of the society.
4) Limited Liability:
The liability of members of a co-operative society is limited to the
extent of capital contributed by them. Unlike sole proprietors and
9

partners the personal properties of members of the co-operative

societies are free from any kind of risk because of business
liabilities.
6) Elimination of Middlemens Profit:
Through co-operatives the members or consumers control their
own supplies and thus, middlemens profit is eliminated.

7) State Assistance:
Both Central and State governments provide all kinds of help to
the societies. Such help may be provided in the form of capital
contribution, loans at low rates of interest, exemption in tax,
subsidies in repayment of loans, etc.
8) Stable Life:
A co-operative society has a fairly stable life and it continues to
exist for a long period of time. Its existence is not affected by the
death, insolvency, lunacy or resignation of any of its members.

10

Disadvantages of Cooperative Society

1. Limited Capital:
The amount of capital that a cooperative society can raise
from its member is very limited because the membership is
generally confined to a particular section of the society. Again
due to low rate of return the members do not invest more
capital. Governments assistance is often inadequate for most
of the co-operative societies.
2. Problems in Management:
Generally it is seen that co-operative societies do not function
efficiently due to lack of managerial talent. The members or
their elected representatives are not experienced enough to
manage the society. Again, because of limited capital they are
not able to get the benefits of professional management.
11

3. Lack of Motivation:
Every co-operative society is formed to render service to its
members rather than to earn profit. This does not provide
enough motivation to the members to put in their best effort
and manage the society efficiently.
4. Lack of Co-operation:
The co-operative societies are formed with the idea of mutual
cooperation. But it is often seen that there is a lot of friction
between the members because of personality differences, ego
clash, etc. The selfish attitude of members may sometimes
bring an end to the society.
5. Dependence on Government:
The inadequacy of capital and various other limitations make
cooperative societies dependant on the government for support and
patronage in terms of grants, loans subsidies, etc. Due to this, the
government sometimes directly interferes in the management of the
society and also audits their annual accounts.

12

CHAPTER 4
FORMATION OF COOPERATIVE SOCIETY

13

a) Formation of Co-operative Housing Society:-

Practically every developer has to form a Co-operative Housing

Society at one point of time or another. With the limited amount
of options available with regard to management of the affairs of
the building i.e.
Condominium
Private Limited Company and
Co-operative Society, (excluding the unrealistic rental housing)
it will not be an exaggeration to state that in at least 90% cases
particularly in Mumbai the Promoters and/or the Builders have
formed a Co-operative Housing Society.

14

 There are basically four types of Co-operative Housing

Societies connected with the housing. (a) Open Plot Societiesmembers purchase or take one lease a plot of land and they
construct the building.
(b)

Flat Owners Societies- When a builder constructs flats and

sells them to Flat Owners, the

Society when formed is called Flat Owners Society
(c)

Tenant Societies- When Landlord forms a Society of

tenants, it is called Tenants Society. (d) Housing Board

Societies- When a Society is formed by Allotted of flats and
building is constructed by the Housing Board Authorities, i.e.
Mumbai Housing and Development Board, then the Society so
formed is of the type of Housing Board Society
The procedure for Registration of a society begins with electing
a Chief Promoter in a meeting of the Promoter.
Normally, the name reservation proposal should be
accompanied with the signature of at least 10 Promoters who
have attended the meeting. It is a common belief that the
Society should consist of at least 10 members.
Flat means a separate set and self-contained set of premises
used or intended to be used or intended to be used for residence,
15

or office or show-room, or shop, or go down and includes a

garage, or dispensary, or consulting room, or clinic, or flour
mill, the premises forming part of a building and includes an
apartment.
The Chief Promoter should submit Registration Proposal to the
Registering Authority within a period of 3 months from the date
of issue of Letter of Reservation in the name of the proposed
Society.
The documents that are normally to be submitted to the
Registering Authorities are as under :1. Application for registration of Society in Form A along with
Statement A. Enclosure to application for Registration as per
Rule 4(1) of Maharashtra Co-operative Societies Rules, 1961.
2. Information about proposed society in Statement B (vide
Govt. Circular dated 2-5-1980).
3. Information about promoter members of the proposed society
in Statement C (vide Govt. Circular Dt. 2-5-1980).
4. A Statement of Accounts as per Form D.
16

5. Model Bye-laws.
6. Bank Balance Certificate.
7. R.B.I. / Treasury Challan for payment of Registration Fee of
Rs. 500/-.
8. Title Clearance Certificate from an Advocate
9. A true copy of the approved Building Plan.
10. Letter of Authority Granting permission to commence
construction work/Completion Certificate (if applicable).

11. Affidavit on Rs. 20/- Stamp Paper from at least 10 promoter

members to the effect that they are residing in the area of
operation of the Society (Proposed), made before a
Competent Authority.
12. Affidavit from the Chief Promoter on Stamp Paper of Rs.
20/- executed before the Competent Authority in form Y.

17

13. Certified True Copy of agreement made on Stamp paper and

registered between the builder, promoter and purchasers of
flat.
14. Where the promoter members are firms/ companies, a letter
of authority from such firms/companies authorizing the
promoter to sign on behalf of firm/company.
15. In case of such proposed societies, names of 60% of the flat
holders of the total number of flats constructed or proposed to
be constructed as per the plan approved, must be included in
Statement A to be attached to the Registration Proposal.
Stamp duty:Present rates of stamp duty for residential premises in the city
of Mumbai are RS. 38,750/- on Rs. 10, 00,000/-. Thereafter it is
@ 8% for the additional value. The rate of stamp duty for
shops/Galas/office Premises and Garage even if used for car
parking is 10% in Mumbai Stamp duty has to be paid on the
agreement Value or the market value of the property whichever
is higher. Stamp duty has to be paid every time the flat is being
sold. Stamp duty has to be paid even if it is a transfer within
family.
18

b) Registration of Documents:The documents have to be registered within a period of fours

months from the date of its execution. The parties can go to the
office of the Joint Sub-Registrar individually /collectively to
register the document. If for certain reasons the parties cannot
attend the office of the sub- Registrar within a period of the
four months then in such cases the parties can execute a deed of
confirmation and complete the registration formalities.
c) Stamp paper:As per the amendment of section 34 of the Bombay Stamp Act
1958, the stamp paper should be in the name of one of the
parties executing the document.

19

Harileela co-op. housing society Ltd housing society Ltd.

RECEIPT AND PAYMENT for the year ended 01-04-09 to 31-03-2011

RECIEPT
Opening cash/bank balance
R.D.C.C. bank
Abhyudaya co-op. bank
RDCC bank

Rs.
1270
206219
20251.50
4420

PAYMENT
Maintenance & repair
Stationery and Xerox
Pest control
Water bill

Rs.
30713
672
1000
27846

Electric bill
Bonus
Meeting
Bank charge
Crack filling, shed & coloring
Flooring work
Fix deposit
Salary
Festival &poojaexp
Plastic tank

950
2200
2292
211
293700
7000
80000
24200
12548
15250

Closing cash balance

R.D.C.C. bank

6021
81583

(chief promoter)

Member contribution
Water, shed & color
Transfer premium
Bank interest

178995
168930
30000
3288

20

TOTAL

613373.50

Abhyudaya co-op bank

RDCC bank (chief promoter)

22767.50
4420

TOTAL

613373.50

INCOME & EXPENDITURE for the year ended 01-04-09 to 31-03-2011

INCOME

Rs.

EXPENDITURE

Rs.

Member contribution

178995

Maintenance & repair

30713

Water, shed & color

168930

Stationery and Xerox

672

Recovery in Yr

168930

Pest control

1000

Water bill

27846

Electric bill

950

Bonus

2200

Meeting

2292

Bank charge

211

Crack filling, shed & coloring

293700

Flooring work

7000

Plastic tank

15250

Salary

24200

Festival &poojaexp

12548

Surplus balance

65491

TOTAL

486646

(+) trf. From B/S recovery

In last Yr.

Bank interest

TOTAL

135433

3288

486646
21

BALANCE SHEET for the year ended 31-03-2011

LIABILITIES

Rs.

ASSETS
Closing cash/bank

Rs.

Paid up share capital

4250

balance

6021

60770

R.D.C.C. bank
Abhyudaya co-op bank
RDCC bank (chief

81583
22767.50
4420

Reserve and other fund

Reserve fund
30770
(+) trf. Premium
30000

promoter)
Member contribution

Current liabilities &

--

--

Investment & deposit

Fixed deposit

80000

Current assets, loans &

--

provisions

advances

Income & expenditure A/C

Surplus balance
74571.50

Fixed assets
Dead stock

(+) surplus in Yr.

TOTAL

65491.00 140062

205082.50

(-) depreciation
2573

TOTAL

22

12864

10291

205082.50

RECEIPT AND PAYMENT for the year ended 01-04-10 to 31-03-2012

RECIEPT

Rs.

PAYMENT

Rs.

Opening cash/bank balance

R.D.C.C. bank

6021
81583

Maintenance & repair

Sinking fund F.D.

27431
4000

Abhyudaya co-op. bank

22767

Pest control

2500

RDCC bank (chief promoter)

4420

Water bill

30844

Electric bill

24590

Bonus

1250

Member contribution

139800

Meeting

849

Water, shed & color

76500

Bank charge

40

Sintex tank refund

4024

Shed work

73900

Bank interest

2403

Dead stock

1300

Member share

250

Fix deposit

50000

Member entrance fee

100

Salary

32200

Festival &poojaexp

16241

insurance

4838

Closing cash balance

R.D.C.C. bank

9683
30212

Abhyudaya co-op bank

23570

RDCC bank (chief promoter)

4420

TOTAL

337868

TOTAL

337868

INCOME & EXPENDITURE for the year ended 01-04-10 to 31-03-2012

23

INCOME

Rs.

EXPENDITURE

Rs.

Member contribution

139800

Maintenance & repair

27431

Water, shed & color

76500

insurance

4838

Bank interest

2403

Pest control

2500

Sintex tank refund

4024

Water bill

30844

Electric bill

24590

Bonus

1250

Meeting

849

Bank charge

40

Shed work

73900

Salary

32200

Festival &poojaexp

16241

Depreciation(dead stock)

2318

Surplus balance

5726

TOTAL

222727

TOTAL

222727

BALANCE SHEET for the year ended 31-03-2012

24

LIABILITIES
Paid up share capital

Rs.
4500

ASSETS
Closing cash/bank balance

Rs.
9683

Reserve and other fund

Reserve fund

60770

R.D.C.C. bank
Abhyudaya co-op bank
RDCC bank (chief promoter)

4420
23570
30212

Member contribution

Investment & deposit

Fixed deposit
Sinking fund F.D.

Current liabilities &

provisions
Income & expenditure A/C
Surplus balance
140062.50

Current assets, loans &

advances

130000
4000

Fixed assets
Dead stock
12864
(+)purchase in Yr.
1300

(+) surplus in Yr.

5726.00

145788
(-) depreciation

9273

2318

TOTAL

211158

TOTAL

211158

AUDIT REPORT
(Maharashtra state co.operative act 1960 section no. 81(5-B) &
rules 69)

25

I have examined the attached balance sheet as 31 st march 2011, 31st

march 2012 and the income & expenditure account for financial year
01-04-09 to 31-03-2012 of the Harileela co-op. housing society Ltd
housing society Ltd., Panvel (E) and report that:1. We have obtained all the information and explanation which the
best of my knowledge and belief were necessary for the purpose of
our audit.
2. In our opinion, proper book of accounts as required under the
M.C.S Act, rules and Bye Laws of the society has been kept by the
society.
3. In our opinion and the best of our information and according to the
explanation given to us.
a) The accounts subject to and read with the statement of general
remarks there on stated in PART-I and PART-II attached here
with gives information required under the Maharashtra Cooperative societies Act and present true and fair view of
financial transaction of the society.
b) the balance sheet and income and expenditure account are in
agreement with the books of account and the said balance sheet
gives true and fair view of state of affairs of the society as on
31st march 2011 and 31st march 2012 and the income and
expenditure accounts gives true and fair view of the
surplus/deficit for the period ended on that dates.
26

27

CHAPTER 6
COMPARATIVE BALANCE SHEETS

28

Comparative Balance Sheets as on 31st Dec 2011& 31st Dec 2012

Particular

31-03-2011

31-03-2012

(Increase/

% Of (increase/

Decrease)

Decrease)

Liabilities
Paid up share capital

4250

4500

250

5.88

Reserve and other fund

Reserve fund

60770

60770

Member contribution

--

--

--

--

Income & expenditure A/C

140062

145788

5726

4.08

TOTAL LIABILITIES

205082.50

211158

60755

29.62

ASSETS
Closing cash/bank balance

6021

9683

3662

60.82

R.D.C.C. bank
Abhyudaya co-op bank
RDCC bank (chief promoter)

81583
22767.50
4420

4420
23570
30212

(77163)
802.5
25792

(94.58)
3.52
583.52

Investment & deposit

Fixed deposit
Sinking fund F.D.

80000
-

130000
4000

50000
4000

62.5
100

Current liabilities &

provisions

-Current assets, loans &

--

advances

29

Fixed assets

10291

9273

(1018)

(9.89)

TOTAL ASSETS

205082.50

211158

60755

29.62

CommentComparative Financial Statement analysis provides information to

assess the direction of change in the business. Financial statements are
presented as on a particular date for a particular period. The financial
statement Balance Sheet indicates the financial position as at the end
of an accounting period and the financial statement Income Statement
shows the operating and nonoperating results for a period. But
financial managers and top management are also interested in
knowing whether the business is moving in a favorable or an
unfavorable direction. For this purpose, figures of current year have to
be compared with those of the previous years. In analyzing this way,
comparative financial statements are prepared.
Comparative Financial Statement Analysis is also called as
Horizontal analysis. The Comparative Financial Statement provides
information about two or more years' figures as well as any increase
or decrease from the previous year's figure and it's percentage of
increase or decrease. This kind of analysis helps in identifying the
major improvements and weaknesses. There is increase in total
30

liability and a total asset as in 2011 it was 205082.50 but in 2012 it

increase by 29.62% i.e. 211158. We can see that there is increase in
all asset and liability except fixed asset in 2011 it was 10291 but It fall
by 9.89% in 2012 i.e. 9273.

31

CHAPTER 5
CONCLUSION

32

I conclude based upon the data in my project I have learned what is cooperative
housing society and there are many advantages and disadvantages in
cooperative housing society. Though the main aim of these cooperative housing
society is not to earn profit but still they are interested in knowing whether their
current income is more than the current expenses or not. They are also keen in
knowing the financial position of their concern. Co-operative Societies are not
charitable societies. They carry on Economic Activities. The profit is not the
motive but the proper accounts need to be maintained and presented before the
members for their approval in the Annual General Body meeting.

While doing this project I learn how to register the cooperative housing society,
step involve while registering a society. While studying the auditing report of
two year 2011 and 2012 and making project on a Harileela cooperative housing
society was also a knowledgeable experience for me.

33

CHAPTER 6
BIBLIOGRAPHY

34

BIBLIOGRAPHY
www.google.com
www.wikipedia.com
www.icai.com
www.investopedia.com

35