Committee for Co-operatives and

NPO Sectors

CA Vijay Kumar Garg

Chairman
Committee for Co-Operatives and NPO Sectors, ICAI

Vijay Kumar Garg

OVERVIEW
Co-operative
and NPO Sector

Vijay Kumar Garg

ABOUT THE COMMITTEE:

Non standing committee of ICAI, came in force during the
year 2011-12.
The main focus/terms of reference of the committee are

(Highlights) :
-Suggest

suitable REFORMS IN STATUS-Cooperative and NPO sector

- Promote UNIFORM ACCOUNTING frameworkCooperative and NPO
-To
promote
state
vise
AUDITORS
EMPANELMENT
and interaction with the concerned
authority
-To promote GOOD GOVERNANCE, best
practice and
prudent financial management in
co- operative and
NPO sector
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-To promote
SOCAIL AUDIT concept

-AWARENESS program for all stakeholders

-To provide TECHNICAL and GOVERNANCE
INPUT
training/workshops/publications
-AWARD/RECOGNITION for CSR- initiative by
NPO/Cooperatives/ Corporate
SUPPORT
to
State/Central
Government/Corporationin this sector
-Develop necessary technical GUIDES and
PUBLICATIONS
- Develop KNOWLEDGE PORTAL
- Help the government in MONITORING
financial
discipline
-SUGGESTIONS/ Recommendations on issues
relatedFCRA
-To conduct CERTIFICATION COURSES on
regulatory and accounting aspects
Vijay Kumar Garg

TERMS OF REFERENCE (Detailed):

1To develop necessary technical guides

and
publications for the benefit of Co-operative banks,
Co-thrifts and credit societies and other Cooperatives as a national movement.
To develop a knowledge portal providing
information regarding subsidies and other support
received by the NPOs from the State and the
Central Government and to promote various
government initiatives to implement social welfare
schemes of the NPO Sector and facilitate sharing
of knowledge regarding Governance, legal
compliance and best practices in financial
management.
To help the government in monitoring financial
discipline in the NPO sector by prescribing
transparent guidelines and procedures including
documentation and evidence of actual work done
and to advise the government on limitations to be
imposed on administrative and other expenditures
of the NPOs specially those incurred out of
government grants.
Vijayrecommendation
Kumar Garg
To suggest
on issues related to5

TERMS OF REFERENCE (Detailed):

Cont..
To suggest suitable reforms in the statutes regarding

Co-operatives and NPOs.

To promote uniform accounting framework for Cooperatives and NPOs.
To formulate guidelines for state vise
auditors
empanelment to interact with the concerned
authorities.
To promote good governance, best practices and
prudent financial management in the Co-operatives
and NPO sectors/ mutually aided Co-operative
Societies [MACS]/ Self help groups/clusters and
federations.
To promote social audit concept in the NPO and Cooperative Sectors and conduct awareness programs
for the benefit of the stakeholders.
To provide technical and governance inputs through
training, workshops, resource materials, publications
to the management personnel and members of
Governance of Co-operatives and NPO Sectors.
To constitute an award/recognition for corporate social
responsibility
initiative by any NPO/Co-operatives/
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Corporates.

Statues Governing
Cooperatives and NPO:
Co-operative Societies:
A)Co-operative societies Act
1912
B)Multistate Co-operative
Societies Act 2002
C)State Co-operative Societies
Act(Rajasthan 2001)
D)NABARD Act 1981
E)Mutually Aided Cooperative
Societies Act (MACS)
Vijay Kumar Garg

B)NPO:
a) The Societies Registration Act 1860Central
b) State vise societies registration
act..(In Rajasthan 1958)
c)State vise public trust
act..(In Rajasthan 1959)
d)Companies registered under section
25 , Companies Act 1956
e)Religious Endowment Act 1863
f) The Charitable and Religious Act 1920
g)Any Board/Corporation/Commission
formed by State/Central Government
by Separate Act/Non trading
Corporation (i.e. KVIC, Khadi Board,
CAPART, Food Corporation, OBC
Commission,
Social Welfare Board,
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COOPERATIVE SOCIETY
Vs SOCIETY?

Vijay Kumar Garg

Co-operative Society Vs Society:

Cooperative Society:
Basic Principles- 1) Voluntary and Open Membership
2) Democratic member Control
3) Member Economic Participation
4) Autonomy and Independence
5) Education, Training and Information
6) Co-operation among Co-operatives

Society/NPO:
Basic Principle- 1) Voluntary and Open membership
2) Democratic member Control
3) No Profit Object
4) Autonomy and independence
5) For social/charitable purpose
6) Service to the society at large

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IMPORTANT FACTS ABOUT COOPERATIVE AND

NPO SECTOR IN INDIA:
Year 2012, has been declared as International Year of
Cooperatives by United Nations of States. (Launched on 31 st
Oct, 2011)
In India, Cooperative and NPO is the third largest sector of
the economy.
Form birth till death, Cooperative/NPO sector affects each
and every part of our life. It is present in our routine and day
to day life.
There are more than 10 Lacs NPO in the India
NPOs employ more than 25 million persons on paid and
volunteer basis
10 States cover more than 80% of the society i.e.
Maharashtra, Andhra Pradesh, UP, Kerala, Karnataka, Gujrat,
WB, Tamilnadu, Orrisa and Rajasthan
Following are the facts from Annual Report 2009-10, FCRA,
Ministry of Home Affairs :
a) A total of 38436 associations have been registered
under FCRA Act
Vijay 2010
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TRENDS OVER LAST 10 YEARS YEAR:

YEAR

No. of
Registered
Associations
(As on 31st
march of
financial
year)

No. of
Reporting
Associations

Amount of
Foreign
Contribution
(Rs. in
Crores)

1999-2000

21244

13986

3924.63

2000-2001

22924

14598

4535.23

2001-2002

24563

15598

4870.52

2002-2003

26404

16590

5046.51

2003-2004

28351

17145

5105.46

2004-2005

30321

18540

6256.68

2005-2006

32144

18570

7877.57

2006-2007

33937

18996

11007.43

2007-2008

34803

18796

9663.46

2008-2009

36414

20088

10802.67

2009-2010

38436
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Kumar Garg

21508

10337.59

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New Trends: Corporate Social

ItResponsibility
is organization's responsibility in the favor
of society, employees and environment .

Big corporate houses and Celebrities at

National and International level have created
large funds and are organizing and promoting
social events in the filed of Education, Health,
Poverty, Food, Woman etc.
There are many companies , which are
participating in various programs for the
welfare of society:
1)Microsoft: World Food Program, Save the
Children etc.
2)SAP: Research, school, education
3)WIPRO, TATA, BPL, Infosys, Amul, Reliance at
national and international level are running
various social programs for Health, Education,
Poverty, Food etc.
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Professional
Opportunities

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Professional Opportunities:
Consultancy/Advisory:
Consultancy/Formation of Cooperative Society and NPO
Advisory on various domestic grants/subsidies/government
schemes
Advisory on various international grants/
subsidies/schemes
Accounts Consultancy
Project Consultancy

Audits:
Statutory Audit under various statues- (Registered under
relevant act)
Internal Audit
Audit U/s 12A(b) of the Income Tax Act
(If total income>Basis exemption limit)
Audit under Foreign Contribution (Regulation)
Act,2010
(As per Vijay
Rule
17(1)
Kumar
Garg of the Foreign Contribution Rules
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Professional Opportunities:
Others:
Reviewer of the financial management system
Trainers and resource persons
Financial Managers and CFOs
Team Member of Senior Management and CEOs
Member in Board or in governing bodies

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SCOPE FOR CHARTERED ACCOUNTANTS:

Cont..
Consultancy:
Professional Consultancy :The auditor has great
opportunities to advise the organisation regarding review of
financial statements, application of income, accumulation of
income, investments of funds, filing application for
accumulation and such other requirements to obtain the
necessary exemption under the Income-tax Act 1961.

Audits:
Audit under various statues: NGO s has to get its
accounts audited by Chartered Accountants as per their
statues under which they are registered.

Audit U/s 12A(b) of the Income Tax Act: As

per section 12A(b) of the Income Tax Act 1961,When the total
income of the organisation(NGO, Cooperative Society etc.)
exceeds the basic exemption limit in any previous year, the
accounts of the organisation
have to be compulsorily
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SCOPE FOR CHARTERED ACCOUNTANTS:

Cont.
Audit2under Foreign Contribution
(Regulation) Act,2010:
Every organisation in receipt of foreign contribution must get
its accounts audited by a Chartered Accountant under Rule
17(1) of the Foreign Contribution Rules 2010.
In the case of a registered organisation, audit is
compulsory even though no funds are received during the
year.

Audit on behalf of Donors and Funding

Agencies: Most donors require an audit report so as to
ensure that project has been implemented as per the
agreement.

Others:

Employment Opportunities: Large NPOs employ and

trained qualified accountants and Finance Managers on a
regular basis on attractive
Vijay Kumar Gargpay packages.

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SCOPE FOR CHARTERED

ACCOUNTANTS: 3

Member in Governing Board of NPO/NGO:

Chartered Accountants are financial experts , hence they could

be appointed in the Boards, Governing Bodies and Committees
of NPO sector organisations.

Advocacy/Lobbying for Accounting Standards,

Laws etc: The sector faces many challenges due to new
laws, rules and regulations. There is a great need to lobby with
the respective authority or the Government Agency to amend
the respective legislation or the regulation.

Member of Advisory Board: There is a good scope for

Chartered Accountants to become members of these Advisory
Board like Finance Advisory Committee and play a useful role.

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ACTION PLAN
FOR THE YEAR
2012-13
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ACTION PLAN FOR THE YEAR 2012-13:

Cont

Collect and consolidate data of multi-state

cooperative societies working in India at state/central
level.
Coordinate with Ministers/Registrars/ concerned IAS
officers in different states of India.
Coordinate with the various government
department of the concerned ministries working in the
area of Cooperatives and NPO Sector.
Define scope for Chartered Accountants in
Cooperative and NPO sector and issue publication .
Cont
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ACTION PLAN FOR THE YEAR 2012-13:

Cont1

Release Internal Audit manual for Cooperatives and

NPO.
Make available details of foreign funding
agencies.
Release Quick Insight relating to all features of
Cooperatives, NPO and NGO.
Award and Recognition Function.
Organize Conclave of Banks, Educational
Institutions, Social work institution, Foreign Funding
Institution, Production and Marketing Societies,
Government NPO,
Multi
Vijay Kumar
Garg State Societies u/s 25

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ACTION PLAN FOR THE YEAR 2012-13: 2

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ACTION PLAN FOR THE YEAR 2012-13:

3
Publications related to Cooperative and NPO
Sector :
-Guidance Note on Audit of Public Charitable
Institutions under Income Tax Act 1961 (2007)
-Technical Guide on Accounting & Auditing in Notfor
profit
Organizations/NonGovernmental
Organizations (2009)
-Taxations of Charitable Trusts and Institutions
(2009)
-Code of Governance for NGOs (2009)
-A study on Foreign Contribution Regulation Act1976, An analysis, Commentary and
Review
(2010)
-Applicable Accounting Standard ????
- ApplicableVijayAuditing
Standard ???
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COOPERATIVE
SECTOR
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HISTORY:
-After independence
state

1947-

India-

welfare

-Help of people in education/health/social

welfare and development
-Firstly started in agriculture
sectors.
-Merging resources
common problems

of

farmers

and allied
for

solving

-The problems of rural indebtedness and the

resultant conditions of farmers created an
Vijay Kumar Garg
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environment
for
the
chit
funds
and

Legislative History: Cont..

Cooperative Credit Societies Act, 1904 - The
First Incorporation
As its name suggests, the Cooperative Credit Societies Act was
restricted to credit cooperatives.

Cooperative Societies Act, 1912

Under this Act, Urban cooperative banks converted themselves
into
Central Cooperative Banks with primary cooperatives and
individuals as their members.

Multi-Unit Cooperative Societies Act, 1942

With the emergence of cooperatives having a membership from
more than one state such as the Central Government sponsored
salary earners credit societies, This act came in force.

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Legislative History: 1
NABARD Act, 1981
The National Bank for Agriculture and Rural Development
(NABARD) Act was passed in 1981 and NABARD was set up to
provide re-finance support to Cooperative Banks and to provide
resources of Commercial Banks and Regional
Rural Banks to increase credit flow to the agriculture and rural
sector.

Multi-State Cooperative Societies Act, 1984

With the objective of introducing centralised legislation and to
bring uniformity in administration and management, the MSCS
Act of 1984 was enacted.

Multi-State Cooperative Societies Act, 2002

Unlike the State Laws, which remained as a parallel legislation
to co-exist with the earlier laws, the MSCS Act, 2002 replaced
the earlier Act of 1984.
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Types of Co-operatives:
Although all types of cooperative societies work on the same principle,
they differ with regard to the nature of activities they perform.
Followings are different types of co-operative societies that exist in our
country.
Consumers Co-operatives
Producers Co-operative Society
Co-operative Marketing Society
Co-operative Farming society
Housing Co-operatives
Agricultural Co-operatives
Co-operative banks/Credit Society which may be further sub-classified
as:
-Primary Urban Co-operative Banks.
-Primary Agricultural Credit Societies.
-District Central Co-operative Banks.
-State Co-operative Banks.
-Land Development Banks.
Others:
Khadi

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Sector vise Classification:

Cont
Cooperative Society:
-GSS ( Gram Seva Sahkari Samiti)- CCB (Central Cooperative Bank)Apex BankNABARD/Reserve Bank
(Purpose-short term/mid term loan to members)
- KVSS (Kray Vikray Sehkari Samiti)- RAJ FED- NAFED
(Purpose- Trading by any person)
- PLDB (Primary Land Development Bank)-SLDB- NABARD
(Purpose- Long term loans to members)
-UPHAR/SAMRIDHI/NAV JEEVAN/SHOWROOM- CONFED-NAFED
(Purpose- Trading of consumer products by any person)
- Primary Bunkar Sangh-Apex Bunkar Sangh
(Manufacturing/Trading by members)
-Karmchari Bachat And Sakh Sahkari Samiti
- Fisheries

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Non Profit
Organizations
(NPO)
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HISTORY:
In the early 1970s a new breed of organizations
emerged called voluntary organizations.
These organizations were started by people
committed to the cause of the poor and the
downtrodden.
In the late seventies and early eighties, such
organisations multiplied and spread all over the
country.
They
started
receiving
both
local
and
international donations for various programmes
32
and activities.Vijay Kumar Garg

Abbreviations for
Societies/NPO:

NGO
NPO
NFPO
VO s
VDO s
GONGOS

:- Non Government Organization

:-Non Profit Organization
:-Not for profit Organization
:-Voluntary Organization
:-Voluntary Development Organization
:- Government Promoted NGO

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Sector vise
Classification:

NPO:

1) Education
2) Social
3) Medical
4) Legal
5) Old Age
6) Orphanage
7) For Women
8) For
Children
9) For Tribal's
10) Environment
11) Awareness
12) Khadi
13)Village and Cottage Industry
14) Health
15) Rural Development
16) Others

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NPOs working at National and

International Level:
At National Level: (inclusive list)
1)CAPART (various NGOs are currently run by this organization)
2)NACO ( Various NGOs are run by this organization)
3) SNGO
4) Various NGOs run by Central Social Welfare Board,
Department of Health & Family Welfare, Ministry of Social Justice
& Empowerment etc.
At International Level: (inclusive list)
1) Red cross
2) Lions Club
3) Rotary Club
4) Lioness Club
5) SMILE
6) Help Age India
7) Global Shikha
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Sources of funds of NPO:

Self-generated funds, loans, grants and
donations.
Funds from the Governments of other countries.
Numerous funding organisations who provide from
their own funds.
Funds raised from the public or their respective
Governments.
The Government of India and the State
Governments also provide large amounts of funds
from the social sector allocation and make it available
to the various organisations
working in the NPO
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Suggestions:
Members are always welcome to give their valuable
suggestions regarding development and enhancement of
Cooperative and NPO sector in India.
Members can give their suggestions at:
Committees Mail ID: congos@icai.org or
Presidents mail ID: vijaymgarg@yahoo.com

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THANK
YOU.
Vijay Kumar Garg

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