Importance of Accounting for Proper Management of Society Funds

Society Fund Management Solutions

A Society will stand well economically if funds are properly managed by the members of the Managing Committee.

Funds, Incomes, and Society expenses can be controlled and known when they are properly accounted for and recorded. Society Billing and Accounting System is the only way of keeping track in an effective manner.

Accounting Records may be manual or computerized depending on Society’s preferences and needs. Manual records are more likely than computerized documents to be human errors. For good decision-making in business, accurate financial statements are required and computerized accounting systems are thus advisable.

Thus, it is essential to know as per bye-law no. 141 and Rule 65 of Maharashtra Co-operative Societies Rules, 1961 what records a required to be maintained by housing societies

  1. The Cash and the Bank Book
  2. The General Ledger
  3. The Personal Ledger (member-wise monthly collection register)
  4. Bill Register (month-wise charges register)
  5. Vouchers for Cash and Cheque payments
  6. Monthly/quarterly / six-monthly / yearly bills raised on the members
  7. Receipts of the collection of charges
  8. Bank Passbook

In case the Society has appointed an accountant as a society Staff to be a part of management to do computerized accounting and billing, then the Society may ask the accountant for the following reports-

  1. Detailed Bill Register
  2. Members’ Arrears List
  3. Receipts and Payments report
  4. Bank Book Ledger
  5. Petty Cash Book
  6. Bank Reconciliation Report
  7. Balance Sheet
  8. Income And Expenditure
  9. Advance status of Flats
  10. Payout Report


Annual statements

The following statement of accounts is prepared at the end of every year (31st March) on the basis of the above records.

  1. Trial Balance or Receipt and Payment Account for the year ending on 31st March of each year.
  2. Income and Expenditure Account for the financial year.
  3. Balance Sheet as on the last day of the financial year.
  4. Members’ Arrears statement

Maintenance of various files: Housing Societies should maintain separate files for the correspondence made with different statutory authorities like-

Annual Statements

  1. Local Authority
  2. Registrar, Federation
  3. Electric Department
  4. Police Station
  5. Members’ application
  6. Nomination forms
  7. Transfer forms
  8. Building records
  9. Registration records
  10. Notice of Meetings
  11. Complaints/Suggestions from members
  12. Audit of the Society records
  13. Sanctioned plan/layout of the Society
  14. Papers regarding ownership of the Society / Conveyance Deed

Usually, the Managing Committee members have less time to spare for Society matters, thus, is it is advisable to appoint an accountant to keep accounts and prepare maintenance bills

READ MORE: Roles and Responsibilities of RWA Managing Committee and Members

Precautions to be taken by members for the management of the accounts

  1. To avoid and keep a check on misuse of cash paid by the member it is essential to audit and inspect accounts on a periodical basis Instead of paying the maintenance charges in cash, it is always safer to pay by cheque.
  2. Members should meet office-bearers periodically for an informal discussion on Society matters and ask for an explanation if they find their acts unacceptable. Members should be alert and should see that their hard-earned money is utilized properly by office-bearers like society staff management, expense management.
  3. Members should see whether the Maintenance bill is raised as per the bye-laws. For example, Non-Occupancy Charges are 10% of service charges. Each member should know the various heads under which they are charged and the reason for which they are charged.
  4. It is the right of a member to take action against the mismanagement of funds. Fraudulent acts of the office bearers are recoverable and punishable. The members can complain to the Deputy Registrar of Co-operative Housing Societies under the MCS Act 1960, Section 83 for investigation and losses caused to the Society.

Precautions to be taken by office-bearers for the management of the accounts

These are very simple precautions but their ignorance creates many problems for the accountant and auditor at the end of the financial year-

  • The Housing Societies are required to file Income Tax returns every year and also make the payment of TDS and file TDS returns.
  • Vouchers should properly be made for cash and cheque payment with proper narration and duly signed by a minimum of 2 Managing Committee members. Supporting bills should be properly attached. It is also essential that vouchers are written by legible handwriting.
  • Before depositing cheques received from members, it is essential to write behind the slip certain details such as the bank’s name cheque number, and flat number and to specify whether the cheque is received against maintenance/transfer premium/membership fee/share transfer fee/donation, etc.
  • To bind used Slip Books for evidence and Society’s record.
  • Used Cheque Books should be filed and kept for reference.
  • To deduct TDS if applicable and deposit the cheque by the 7″ of the following month.
  • To maintain Petty Cash Book so that it is convenient to counter check with the cash vouchers.
  • To provide accounting data on time to the accountant.

Computerized Society and Accounting System: Keeping proper accounts is the backbone of the Society. It is commonly observed that in this modern age, societies still prefer to keep Society accounts manually. The reason given is that there isn’t much to be computerized or that the system has worked well in the past, then why change and invite trouble. The reason may not be totally illogical, but now we should take into consideration the benefits of a computerized system.

    1. A manual account requires more time and effort.
    2. A computerized accounting system eliminates many bulky and time-consuming manual processes.
    3. In addition to calculations being automated, accounting software generates various reports, at the touch of a button. Reports like Members’ Ledger, Members’ Arrears List, Members’ Bill Register, Bank Reconciliation Report, Cash Book, Bank Book, and Income and Expenditure Statement (which is essentially required at the Managing Committee Meeting to plan the next month’s expenses).
    4. Accurate bills are generated with various heads as per bye-laws. Receipt of earlier payment is attached to the bill.
    5. Files and important financial information can be stored in CDs or a pen drive.
    6. Members’ information can be mailed to them if any bill or ledger is Required by them. Thus, it facilitates speedy reporting.

Gradually, all Societies should opt for a computerized accounting and billing system for speedy reporting and accuracy of procedures.


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