Government of Karnataka



May you all have a common purpose,  
May your hearts to be in unison,  
May you all be the same hand,  
So that you can do work off, well.  

  ** RIGVEDA.  


The ancient Indian scripture Rigveda postulates that when the hearts of all the individuals unite together with a common mind and a common goal any work can be carried out with a higher degree of efficiency. Essence of this spirit can be traced even in the meaning of Co-operation which stresses on the principle     ONE FOR ALL; ALL FOR ONE. When individuals get united together adopting this cooperative percepts; they can help each other in obtaining the social and economic upliftment of their own lives in particular and that of the entire community in general.  


Mahatma Gandhi had envisaged that the cooperative movement is a tool for  eradication of poverty and Bapu had always strongly felt that his dream concept of "Gramswaraj" will come true through the co-operative movement. Thus it is evident that cooperative movement has to be essentially a national movement, which is the only means to bring revolutionary changes in the social  & economic structure of national life. As such, the regular audit of these institutions is an integral obligation of the Government, with a view to ensure that the funds are managed as per accepted norms for the welfare of all their members. It is the first and foremost duty of any civilized government to patronise, nurture & guide this movement in the proper direction.

            In order to fulfill this obligation the Government of Karnataka established the Directorate of Cooperative Audit in the year 1977 conferring all required statutory powers and responsibilities to perform its function like a friend, philosopher and guide to the cooperative societies in particular and the cooperative movement as a whole, in general.

            The Directorate of cooperative audit and its personnel are striving hard to conduct the audit of all cooperative societies in Karnataka at least once in a year as envisaged under section 63 of Karnataka Cooperative Societies Act 1959. The department is headed by a Director at the state level. In each district, a Deputy Director is heading the district level office. At the subdivision level, an Assistant Director is heading the Office and at the Taluka level Senior Auditor is heading the office. Along with this setup, hundreds of Auditors, and other supporting staff are striving hard to reach, audit, and guide all categories of societies, scattered over every nook and corner of the state.  




One of the most important characteristic features of the cooperative movement in India has been that it is sponsored by the state. Cooperative movement in Karnataka is also a state sponsored movement. The State Government has participated in the movement actively by providing adequate share capital, loans grants and subsidies to the cooperative institutions, for the upliftment of downtrodden and for the purpose of bringing social and economic changes in the life of members of the society in particular and that of common public in general.

           Cooperative societies have been established in several sectors like credit, banking, processing, production, housing, warehousing, transport and many other spheres related with agriculture and industries. These co-operatives are being engaged as effective tools for ensuring equal distribution of state wealth among all sections of the society by providing them with Government loans, subsidies and grants. Even common people also have participated in the business of these societies by investing their hard earned money.

          In order to protect the interest of public funds and to ensure that the administrative and executive authorities use this fund, in the best interest of the organization, government is engaging cooperative audit as a main weapon. To put it in a nut shell the department is functioning not only as a friend, philosopher and guide to these institutions but also as a watchdog of public fund as well as the co-operative movement itself.

          The audit conducted by the Department of Cooperative Audit, having a statutory backing, looks beyond the routine audit, in as much as, it does not restrict itself to the mere financial verification but also gets into the details of administrative lapses, deviation by the management from Acts, byelaws and discharge of responsibilities by the board of Directors and other executive staff.  By virtue of its detailed verification, it stands apart from other professional auditing. The Karnataka State Cooperative Societies Act 1959 and rules 1960 lay down in detail the scope of cooperative audit.

       Sub Section (2) of the Section 63 of the Act specifies that        

          The audit stipulated Under Subsection (1) shall include an examination of overdue debts, if any, the verification of cash balance and securities, a valuation of the assets and liabilities and an examination of the working and other prescribed particulars of the society".

           Rule 29(1) of the rules 1960 specifies that, audit shall also include verification of debtors, creditors and depositors balances, an examination of the transactions  of the management and the financial statements and to certify the profit or loss actually either reached or incurred.

The Act also empowers the department with various other aspects. Section 63(3) specifies that the Director of Audit or the person authorized by him or the person conducting the audit, shall at all times have access to all books of accounts, documents, papers, securities, cash and other properties belonging to or in the custody of society and may summon any person in possession or responsible for the custody of any such books of accounts, documents, paper securities, cash and other properties to produce at any public office or at the head quarters of the societies or any branch office.  


          The important statutory provisions of Karnataka Cooperative Societies Act 1959 and Rules 1960 and with reference to audit are as listed below:

      Section 63(1): Every cooperative society shall gets its accounts audited at least once in each year by the Director of cooperative audit or by a person authorized by him.

    Section 63(4) (A):  Every cooperative society shall for each cooperative year prepare and furnish financial statement within two months from the end of the year.


  Section 63(10): State Government may, by an order provide for re-audit on an application by cooperative society or otherwise.


  Section 63(11): The Director of Cooperative Audit shall have powers to reexamine or   re-verify the audited accounts of any cooperative society.



  Section 63(12): The auditor shall enquire about the disbursement of loans and advances, and to ensure that personal expenses have not been charged to revenue account.


  Section 63(13): The auditor shall make a report that he has examined and the balance sheet,  profit and loss account he has verified and certified, give a true and fair view about the state of affairs of the Society.


  Section 63(14): The Auditor shall also to state that he has obtained all the information and explanation required for the purpose of audit and the financial statements are in agreement with the books of accounts and returns.


  Section 63(15): Incase if the auditor gets negative answers to the some of the points raised in sub section (13) and (14), he shall state the reason for the answer.


   Section 109: A Cooperative society or an office bearer or member of those societies willfully making a false return or furnishing false information or willfully not furnishing any information shall be punishable.


     Rule 29(2): The statement of accounts as audited, under sub rule (1); together with modifications if any made therein by the director of Cooperative Audit shall be final and binding on the society.


 Rule 30(1): Every Cooperative society shall pay to the State Government audit cost or audit fee accordance with the scale fixed by the Director of Cooperative audit.  

"Co-operation is the gateway to economic freedom" 
                                                                        Mahatma Gandhi 


"Ensure me a good panchayath, a good school 
and a good co-operative  society : 
I will ensure you the Ramarajya"
Pandit Jawaharlal Nehru    


(Co-operation Department)

The greatest challenge to any civilized society is the Economic deprivation it harbours, in league with social deprivation.  It is inescapable that a collective war is waged to banish human deprivation from our midst.  No other organized set up can be more potent for this attack than building human capital among the deprived, through sustainable cooperative Development Initiatives. Congruity with human nature further enhances the value of such initiatives. This principle is germane to the cooperative management in the Country and Karnataka in particular, which ensconces the basic human feeling of self-worth as its core.  The cooperative strategy goes deep into the realms of building financial capabilities and self-confidence especially among the rural poor.

            In pursuit of achieving the noble cause thousands of cooperatives are striving hard throughout the state. Cooperative movement in the state is going on the right lines. In this exciting journey the state, government has to play an important role of a facilitator.

            The state government of Karnataka has created the Directorate of Cooperative Audit to function as an effective tool for monitoring the functions of the cooperative institutions.  In order to bring in more transparency in functioning and accountability of financial parameters of the cooperatives, Directorate of cooperative audit has set up a website called SAHAKARA DARPANA.   This website is like a mirror reflecting the true and correct financial position of all the cooperatives in the state.

            I hope this website, probably first of its kind in the entire country would set in motion a quiet revolution in the field of cooperative audit.  

Principal Secretary to Government,                                                               Cooperation Department.


In pursuit of bringing in a higher degree of transparency in the Government, The State Government is implementing the e-governance strategy throughout the state in all departments. In keeping with the policy, the Department of Co-operative Audit is also striving hard not only to bring in transparency in the administration of the department but also to bring about transparency in highlighting the financial position, strength and weaknesses of Co-operative institutions by hosting on the web the abridged audit report.  This website being citizen friendly, it helps every individual who is interested to participate in the business of a particular Co-operative society as it provides comprehensive information about the financial position, its liability and irregularities if any in the institution. Apart from helping an individual as explained above, the website also provides a plethora of information required by members of the society, the common citizens and also to the Government at the touch of a button.  

Department of Co-operative Audit.