Final Accounts of Cooperative Society
The final accounts of cooperative society refer to the set of financial statements that summarise a society’s performance and position at the year-end. This includes the balance sheet, income & expenditure account, receipts & payments account, cash-flow statement and a trading account if applicable. For residents and decision-makers of housing societies in India, knowing how these work helps ensure transparency, compliance and trust.
Understanding the Final Accounts of Cooperative Society
When you live in or govern a housing society, your collective community is essentially a cooperative body. So when the final accounts of a cooperative housing society are prepared, they reflect how well your society is managing funds. It includes its assets, liabilities, income and expenses. Clear accounts boost trust among members, ensure legal compliance.
For instance, if the housing society balance sheet shows high liabilities or low reserves, residents and the managing committee can act early. Inaccurate or delayed final accounts can trigger audit problems or compliance risks for housing societies. Understanding and managing final accounts keeps society’s finances clear and secure.
Key Components of the Final Accounts of Cooperative Society
The core parts of the final accounts for a cooperative housing society, explained in simple terms:
Balance Sheet
This shows what the society owns (assets) and what it owes (liabilities + capital) at a given date.
Liabilities side
Includes share capital of members, various reserve funds, loans, deposits and current liabilities.
Assets side
Shows cash, bank balances, investments, loans & advances to members, fixed assets and current assets such as inventory or receivables.
Income & Expenditure Account
Much like a profit & loss account, it records all income and all expenses for the period (on an accrual basis), thereby showing surplus or deficit.
Trading Account
Used only if the society engages in manufacturing or trading activity, to compute gross profit or loss from sales and purchases.
Receipts & Payments Account
A simple summary of all cash receipts and all cash payments during the financial year. Crucial for transparent cash flow.
Cash Flow Statement
Shows movement of cash and cash equivalents across operating, investing and financing activities during the year.
Other aspects
Mandatory transfer of a portion of net profits into the statutory reserve fund; annual audit; timely AGM; proper record-keeping.
When all these items are properly prepared, the final accounts of cooperative housing society give a clear picture of the health and activity of the society.
How a Housing Society Should Prepare the Final Accounts?
Here’s a practical step-by-step guide for society’s managing committee or accountant:
- Collect data and records
Gather all cash books, bank statements, investment certificates, share registers, loan registers, statutory books and minutes.
- Prepare Receipts & Payments Account
List all actual cash receipts and payments in the year. This gives the raw cash flow figure.
- Make adjustment entries
Convert the cash-based figures into accrual basis: e.g., interest accrued but not received, expenses incurred but not paid.
- Prepare Income & Expenditure Account
Using the accrual basis data, separate revenue items (e.g., maintenance income) from capital items (e.g., sale of an asset) to arrive at net surplus or deficit.
- Prepare Trading Account
If your society sells goods or does manufacturing, calculate gross profit from sales minus the direct cost of purchases.
- Prepare Balance Sheet
List all assets (cash, bank, investments, loans to members, fixed assets, current assets) on one side; and share capital, reserves, deposits, loans, and current liabilities on the other. Ensure both sides tally.
- Prepare Cash Flow Statement
From earlier accounts, show how cash moved in operations, investing and financing during the year.
- Audit & AGM
Get the accounts audited as required by law, distribute the audited statements at least 14 days before the AGM, and get member approval.
- Record all decisions & transfers
Make sure at least 25% of net profit is transferred to the statutory reserve fund.
- Ensure transparency with Members
Present the final accounts in a way that members can read and understand; include simple commentary, visuals or summary points.
Following this process will help your society deliver accurate and transparent final accounts of cooperative housing society and build member confidence.
Read also: Role of an Accountant in a Housing Society
Common Traps When Preparing the Final Accounts
Here are some frequent pain points housing societies face when preparing final accounts, and how you can sidestep them:
Poor record-keeping
If receipts, invoices or member loan records are missing, you’ll struggle to prepare reliable accounts. Maintaining a combined cash book + ledger and retaining records for at least 7 years can avoid this.
Mixing capital & revenue items
Treating the sale of assets (capital) as regular income distorts the income & expenditure account.
Skipping accrual adjustments
If expenses incurred but unpaid, or income earned but not received, are not adjusted, the result will misstate the society’s true position.
Delayed audit or AGM
A Late audit affects compliance and may lose member trust.
Ignoring reserve fund rules
Many societies forget to transfer the required portion of net profit to the mandatory reserve fund as per the law.
By paying attention to these, your society can ensure the final accounts of cooperative housing society are robust and trusted.
Society Accounting by NoBrokerHood
NoBrokerHood offers a practical society accounting software platform tailored for housing societies and cooperative communities to manage their accounting, member communications, and governance in one place. With features like digital ledger, cash-book automation, audit-ready reports and member access portals, NoBrokerHood helps society committees deliver accurate final accounts of cooperative society while keeping residents informed.
When committees use such systems, day-to-day record-keeping becomes simpler, monthly reviews become feasible, and year-end final accounts are less of a scramble. This means your society can focus more on community-living values and less on digging through old files.
All Solutions by NoBrokerHood:
FAQS
The receipts & payments account records actual cash movements during the year. The income & expenditure account converts that into an accrual basis, separating revenue from capital items and showing the surplus or deficit.
No. A trading account is required only if the society is engaged in manufacturing or trading goods. If it’s purely residential, typically you will prepare an income & expenditure account and a balance sheet.
The audited financial statements of cooperative society should be distributed to members at least 14 days before the Annual General Meeting (AGM), and approval obtained during the AGM.
According to standard cooperative society accounting norms, at least 25% of the net profit must go to the statutory reserve fund before any dividend or surplus distribution.
Generally, the society should retain records for at least 7 years to support the preparation of final accounts, auditing and regulatory review.