New Delhi: The Centre on Wednesday announced a new audit reporting framework for multi-state cooperative societies to make the sector more transparent, professionally run and accountable while protecting members' interests.
The Multi-State Co-operative Societies (Auditor's Report) Order, 2026, or MSCARO 2026, will be implemented in phases to give cooperatives time to upgrade their systems and processes, the Cooperation Ministry said in a statement.
The first phase will cover societies crossing the Rs 1,000 crore threshold.
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The long-term objective is to extend the framework to multi-state cooperative societies (MSCS) crossing Rs 50 crore in relevant financial parameters, it added.
The Multi-State Co-operative Societies (Amendment) Act, 2023, empowered the Centre under Section 73(6) to prescribe auditing and accounting standards for MSCS. The ministry framed the order based on inputs from the Reserve Bank of India, the Institute of Chartered Accountants of India, the Comptroller and Auditor General of India and the societies themselves.
Modelled on the Companies (Auditor's Report) Order (CARO) that applies to the corporate sector, MSCARO sets up a uniform, risk-based format for statutory audit reporting. Auditors will have to report on financial, administrative, governance and compliance parameters through standardised Yes/No responses, with remarks.
The ministry said this would make audit reporting more consistent, help spot irregularities and strengthen regulatory oversight.
The Central Registrar of Cooperative Societies (CRCS) will be able to identify societies with higher financial or governance risks based on audit observations, enabling more focused inspections, inquiries and interventions.
Systematic reporting of non-performing assets, overdue loans, liquidity, deposits, advances, repayment defaults and borrowings is expected to help flag emerging vulnerabilities before they turn serious.
The audit requirements will allow independent verification of investments, use of funds, share capital, membership records and statutory approvals, the ministry said, adding that this would reinforce financial integrity and members' confidence.
The order mandates regular scrutiny of board composition and the eligibility and disqualification of directors; conduct of annual general meetings and board meetings; constitution and functioning of statutory committees; and compliance with related-party transactions.
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Standardised audit data is to be integrated with the CRCS Portal, which could allow automated scrutiny, regulatory dashboards, risk scoring and AI-based analytics, according to the ministry.
Where applicable, auditors will also verify cybersecurity safeguards and anti-money laundering compliance. This covers reporting of suspicious transactions, customer identification requirements, and the appointment of Designated Directors and Principal Officers under the Prevention of Money Laundering Act.
The ministry said the move follows Prime Minister Narendra Modi's vision of 'Sahkar se Samriddhi' and is being carried out under Union Home and Cooperation Minister Amit Shah.
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