DoC recently wrote to the Institute of Chartered Accountants of Nepal (ICAN) -- a quasi-judiciary body -- to give verdict on the cases filed against the CAs. DoC recently conducted monitoring of 10 big co-operatives operating in Kathmandu Valley amid reports of huge investment of co-operatives in realty sector. [break]
“We have sought action against the CAs as our investigations have unearthed that they flouted the 48-point guidelines issued by DoC for the auditors by making faulty audit reports,” Gopi Krishna Niraula, deputy registrar of DoC, told myrepublica.com.
DoC has sought action against the CAs that have been working as auditors for Guna Saving and Credit Co-operatives, Oriental Saving and Credit Co-operatives, Nawakantipur Saving and Credit Co-operatives, Gorkha Saving and Credit Co-operatives, Kantipur Saving and Credit Co-operatives, Lali Gurans Saving and Credit Co-operatives, Sumeru Saving and Credit Co-operatives and Milan Multipurpose Saving and Credit Co-operatives. DoC, however, has not revealed the names of the auditors.
Niraula said the auditors had prepared reports on the financial activities, including credit flow and credit system, of the cooperatives without showing their weaknesses.
An executive member of ICAN confirmed that they had received complaints from DoC that sought action against some auditors.
“The documents provided by DoC are not sufficient to take action against the auditors. We will soon ask DoC for more documents along with the study report on the co-operatives prepared by DoC,” the member added.
In addition to the 10 big saving and credit co-operatives, DoC has already conducted study on the financial positions of additional 18 co-operatives in Kathmandu Valley, Kavre and Kaski.
The study report had stated that the saving and credit co-operatives were not maintaining transparency in financial transaction and most of them were controlled by family members. They were also found to be conducting huge banking transactions, like those of commercial banks, issuing loans only to their members.
Some of them were also found to have transferred the collateral against loan to the accounts of directors, violating standard norms that require collaterals to be deposited in the lending institutions´ accounts.
Similarly, the study had also found that the co-operatives were issuing loan without provisioning risk against loan, not following specific criteria for issuing loan, lacking proper portfolio management and not conducing annual general meetings regularly.
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