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Committee for Co-operatives and NPO Sectors CA Vijay Kumar Garg Chairman Committee for Co-Operatives and NPO Sectors, ICAI Vijay Kumar Garg1.

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Presentation on theme: "Committee for Co-operatives and NPO Sectors CA Vijay Kumar Garg Chairman Committee for Co-Operatives and NPO Sectors, ICAI Vijay Kumar Garg1."— Presentation transcript:

1 Committee for Co-operatives and NPO Sectors CA Vijay Kumar Garg Chairman Committee for Co-Operatives and NPO Sectors, ICAI Vijay Kumar Garg1

2 2 OVERVIEW Co-operative and NPO Sector

3 ABOUT THE COMMITTEE : Non –standing committee of ICAI, came in force during the year The main focus/terms of reference of the committee are (Highlights) : - Suggest suitable REFORMS IN STATUS-Co- operative and NPO sector - Promote UNIFORM ACCOUNTING framework- Cooperative 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 -To promote SOCAIL AUDIT concept Cont… Vijay Kumar Garg3

4 4 -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/Corporation- in this sector -Develop necessary technical GUIDES and PUBLICATIONS - Develop KNOWLEDGE PORTAL - Help the government in MONITORING financial discipline -SUGGESTIONS/ Recommendations on issues related- FCRA -To conduct CERTIFICATION COURSES on regulatory and accounting aspects

5 Vijay Kumar Garg5 To develop necessary technical guides and publications for the benefit of Co-operative banks, Co-thrifts and credit societies and other Co-operatives 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. To suggest recommendation on issues related to the Foreign Contributions Regulation Act, 2010, Rules, regulations and guidelines framed there under and any other laws affecting this sector with a view to ensure smooth flow of funds on one hand and national security and national interest on the other. TERMS OF REFERENCE (Detailed): 1

6 Vijay Kumar Garg6 TERMS OF REFERENCE (Detailed): Cont.. To suggest suitable reforms in the statutes regarding Co- operatives and NPOs. To promote uniform accounting framework for Co-operatives 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 Co-operative 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/ Corporates. To support the initiatives of the State and Central government and corporations in this secto r.

7 Vijay Kumar Garg7 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) Cont…….. Statues Governing Cooperatives and NPO:

8 Vijay Kumar Garg8 B)NPO: a) The Societies Registration Act Central 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, Housing Board etc.) Note: Indian Trust Act 1882, (Preamble of this act says that it is act for private trust and its trustees)


10 Vijay Kumar Garg10 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

11 Vijay Kumar Garg11 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 , FCRA, Ministry of Home Affairs : a) A total of associations have been registered under FCRA Act 2010 upto 31/03/2010. b) Associations reported a total receipt of Rs Crore as foreign contribution. c) TRENDS OVER LAST 10 YEARS:

12 Vijay Kumar Garg12 TRENDS OVER LAST 10 YEARS YEAR: YEARNo. of Registered Associations (As on 31 st march of financial year) No. of Reporting Associations Amount of Foreign Contribution (Rs. in Crores)

13 Vijay Kumar Garg13 New Trends: Corporate Social Responsibility It 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.

14 Vijay Kumar Garg14 Professional Opportunities

15 Vijay Kumar Garg15 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 Rule 17(1) of the Foreign Contribution Rules 2010). Audit on behalf of Donors and Funding Agencies Cont…… Professional Opportunities:

16 Vijay Kumar Garg16 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 Professional Opportunities:

17 Vijay Kumar Garg17 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 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 audited.

18 Vijay Kumar Garg18 SCOPE FOR CHARTERED ACCOUNTANTS: Cont. 2 Audit under 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 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 pay packages. Chartered Accountants are also doing good work as CFOs and Finance Managers in many medium and large NPOs.

19 Vijay Kumar Garg19 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.

20 Vijay Kumar Garg20 ACTION PLAN FOR THE YEAR

21 Vijay Kumar Garg21 ACTION PLAN FOR THE YEAR : 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…

22 Vijay Kumar Garg22 ACTION PLAN FOR THE YEAR : Cont…1 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 State Societies u/s 25 Companies, FCRA, 35AC, Milk Society, UNICEF, World Bank / Government etc.

23 Vijay Kumar Garg23 ACTION PLAN FOR THE YEAR : 2 Provide new Opportunities in KVIC, CAPART, Social Audit, Management Audit, Internal Audit, Agriculture Sector, SC/ ST/ OBC/ Minorities/Women/Social-Board and Commission, Flagship Scheme of Government i.e., NAREGA etc. Organize Work Shops / Seminars / RRC. Exclusive portal consisting various information for the members. Initiate action for Cooperative project Finance. Collect data of NGOs filing return under FCRA with the ministry of corporate affairs. Cont…

24 Vijay Kumar Garg24 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 Not-for profit Organizations/Non- Governmental Organizations (2009) -Taxations of Charitable Trusts and Institutions (2009) -Code of Governance for NGOs (2009) -A study on Foreign Contribution Regulation Act- 1976, An analysis, Commentary and Review (2010) - Applicable Accounting Standard ???? - Applicable Auditing Standard ??? - New publication with Internal Audit Standard Board??? ACTION PLAN FOR THE YEAR : 3

25 Vijay Kumar Garg25 COOPERATIVE SECTOR

26 Vijay Kumar Garg26 -After independence India- welfare state - Help of people in education/health/social welfare and development - Firstly started in agriculture and allied sectors. -Merging resources of farmers for solving common problems -The problems of rural indebtedness and the resultant conditions of farmers created an environment for the chit funds and cooperative societies. HISTORY:

27 Vijay Kumar Garg27 Legislative History: Cont.. Cooperative Credit Societies Act, 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.

28 Vijay Kumar Garg28 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.

29 Vijay Kumar Garg29 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 Village and Cottage industry Milk Types of Co-operatives:

30 Vijay Kumar Garg30 Sector vise Classification: Cont…… Cooperative Society: - GSS ( Gram Seva Sahkari Samiti)- CCB (Central Cooperative Bank)-Apex Bank- NABARD/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

31 Vijay Kumar Garg31 Non Profit Organizations (NPO)

32 Vijay Kumar Garg32 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 and activities.

33 Vijay Kumar Garg33 Abbreviations for Societies/NPO: NGO :- Non Government Organization NPO:- Non Profit Organization NFPO :- Not for profit Organization VO s:- Voluntary Organization VDO s:- Voluntary Development Organization GONGOS:- Government Promoted NGO

34 Vijay Kumar Garg34 NPO: 1) Education2) Social 3) Medical4) Legal 5) Old Age6) Orphanage 7) For Women8) For Children 9) For Tribal's10) Environment 11) Awareness 12) Khadi 13)Village and Cottage Industry14) Health 15) Rural Development16) Others Sector vise Classification:

35 Vijay Kumar Garg35 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

36 Vijay Kumar Garg36 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 sector in India.

37 Vijay Kumar Garg37 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 : or Presidents mail ID:

38 Vijay Kumar Garg38 THANK YOU….

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