Team ADDA celebrated August 15, 2020 with a difference. For the benefit of communities across India, we hosted the Seventh Episode of the Interactive Webinar Series on The A-Z of Apartment Accounting – Part II. Click here to check the first part of the Webinar. In this part, housing society finance experts, Mr. Divakar Koyande and Ms. Disha Koyande answered concerns on the correct method of closing of books of accounts and housing society auditing. Ms. Suchitra Shetty focused on the benefits of online accounting and introduced the participants on using online accounting to manage apartment finances.
The Takeaways Of Closing Of Books & Housing Society Auditing
- All monthly and quarterly bills raised must be the same unless an approval is passed in the GBM or AGM as applicable.
- All reversals as far as the income side is concerned must be passed by the MCM since it qualifies as revenue loss to the housing society.
- If any income, with documented evidence like a contract between the society and the vendor, overlaps two financial years, it has to be entered separately, All income received in the January to March quarter should be present in the books of the previous financial year. All income received for April to the end of the year, must be registered as Advance Payment.
- Auditor must be appointed in an AGM. Alternatively the local District Registrar appoints a suitable auditor for the Community.
- Shift to online Accounting for promotion of transparency, easier and safer accessibility to all documents.
The Q&A Session :
Q1 : Can a Society Member deduct TDS from rent leases for facilities within the society?
A: The member is legally obliged to deduct TDS. However, this is not a revenue loss since the same TDS can be claimed back during Income Tax Filing. TDS has to be recorded in the Balance Sheet on the Asset side as TDS receivable.
Q2 : Is there a concept of Interest Free Deposit that is given to Members of a Society?
A: Yes. It is commonly referred to as Refundable Deposit. All deposits again must be passed in AGMs. Otherwise no society is liable to collect Deposits.
Q3 : Clarification On Share Capital.
A: Authorised share capital is the maximum society can issue. In a Composite society comprising commercial and residential spaces, 10 shares of INR 50 each is dedicated to residents and another 10 shares of INR 50 is dedicated to the commercials. There is no link between Land & Building and Issued Share Capital.
Q4 : Can Members ask for Society Books prior to Audit?
A: Yes, they can. No law prohibits general members of the society to call for the Book of accounts at any given time.