The Cabinet gave the go-ahead to implement the new directives two weeks ago. According to the department, it has dispatched official letters to regulators at the local level to strictly apply the guidelines. Implementing the long-form audit report is one of the key objectives of the new directive, as per the department. “Unlike the short-form audit report, the long-form audit report provides adequate information on the financial health and operating results of an organisation,” spokesperson Narayan Prasad Aryal said.
According to him, the audit report also analyses trends in financial data and the reasons besides making recommendations. “It is a detailed report of the finances and principal aspects of cooperatives such as timely conduction of annual general meeting and related decisions, implementation of anti-money laundering law, internal monitoring system, transactions with other cooperatives and members,” Aryal said. “These provisions could also help lay down guidelines for the management and board of directors on necessary issues.”
The department said the new directive was also necessary to make cooperatives aware in the context of the federal system that has been implemented in the country. Following the establishment of a federal structure, the government has handed over the task of regulating cooperatives to the local governments.
The directive has asked cooperatives to report details of the auditors they have hired to the regulators within three days from the appointment date. “The provision aims to check whether cooperatives have appointed proper persons to prepare their audit reports or not,” Aryal said.
The department seeks to integrate the financial reporting system in the sector so that it can conduct off-site monitoring and prevent possible fraud by cooperatives, Aryal said.
There are 34,512 primary cooperatives and 69 district cooperative associations across the country. Of the total number of cooperatives, more than 13,500 are savings and credit cooperatives. According to the Department of Cooperatives, cooperatives hold Rs302.16 billion in deposits and account for nearly 18 percent of the Gross Domestic Product (GDP).
As per experts, most operators of financial cooperatives lack sufficient knowledge about finance and accounting systems. In addition, cooperatives do not maintain complete records of their financial transactions and reporting system. This behaviour could lead cooperatives into a financial crisis at any time, officials said.
The troubled Oriental Cooperative was an outcome of poor monitoring and lack of effective financial reporting system. Currently, the Problematic Cooperatives Wealth Management Committee led by former chairman of the Special Court Gauri Bahadur Karki is scrutinising the cooperative.
Published: 2018-09-07 09:17:46
The committee has received 7,500 compensation claims against Oriental Cooperative. In a preliminary report, the committee calculated liabilities of almost Rs8 billion in the Oriental Cooperative scam.