India

Ministry Launches New Audit Framework for Multi‑State Cooperative Societies

By Sneha Biswas

The Ministry of Cooperation has introduced the Multi‑State Co‑operative Societies (Auditor's Report) Order, 2026 (MSCARO, 2026), a new audit reporting framework for multi‑state cooperative societies. The framework aims to identify financial vulnerabilities, detect irregularities and improve regulatory oversight. Under MSCARO, auditors will assess key financial, administrative, governance and statutory compliance parameters, reporting on non‑performing assets, overdue loans, liquidity positions, deposits, advances, repayment defaults and borrowings. The data collected is expected to give regulators a clearer picture of the financial health of societies and enable risk‑based supervision. The Central Registrar of Cooperative Societies (CRCS) will use audit findings to identify societies at greater financial or governance risk and conduct focused inspections, inquiries and interventions. The ministry plans to integrate the audit information with the CRCS Portal to support technology‑driven monitoring, including automated scrutiny, regulatory dashboards, risk scoring and AI‑based analytics. Audit requirements will also cover verification of investments, use of funds, share capital, membership records, statutory approvals, board composition, director eligibility, AGM and board meetings, statutory committees, related‑party transactions, cybersecurity safeguards and anti‑money laundering compliance, including checks under the Prevention of Money Laundering Act. MSCARO is founded under Section 73(6) of the Multi‑State Co‑operative Societies Act, following the 2023 amendment that empowered the Central Government to prescribe auditing and accounting standards for multi‑state cooperative societies. The framework was developed with inputs from the Reserve Bank of India, the Institute of Chartered Accountants of India, the Comptroller and Auditor General of India and multi‑state cooperative societies, and draws on the Companies (Auditor's Report) Order applicable to the corporate sector. Implementation will be phased, starting with societies exceeding ₹1,000 crore and later extending to those exceeding ₹50 crore.