The Ministry of Cooperation has notified the Multi-State Co-operative Societies (Auditor’s Report) Order, 2026, known as MSCARO 2026. It is a landmark reform: for the first time, auditors of large multi-state cooperative societies will report in a standardised format modelled on CARO, the auditor’s report order applicable to companies. The framework was designed by an expert committee with which the author of this post was associated.
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Official notification
The order was notified by the Ministry of Cooperation on 14 October 2026. The announcement was carried in PIB press release ID 2323313, posted on 14 October 2026 at 4:47 PM. Read the official press release here.
What is MSCARO 2026?
It is a standardised auditor’s report order for multi-state cooperative societies, on the lines of the Companies (Auditor’s Report) Order (CARO) that applies to companies. It prescribes a uniform format in which statutory auditors must report on key financial, administrative, governance and statutory compliance parameters, with clear Yes/No responses supported by remarks. The objective is stronger financial discipline, accountability and regulatory oversight in the cooperative sector.
Which societies does the order apply to?
Implementation is phased. In the initial phase, the order covers larger multi-state cooperative societies crossing the prescribed Rs 1,000 crore threshold. The press release does not state whether this threshold refers to turnover, deposits or other financial parameters. The long-term objective is to extend the framework to societies crossing Rs 50 crore in relevant financial parameters. Smaller societies will be brought under the framework in later phases.
Key features of the framework
- Standardised reporting format for all covered societies, ending inconsistent audit reports.
- Yes/No responses with supporting remarks, making irregularities easier to spot.
- Coverage of governance, internal controls, risk management and member-related transactions, not just financials.
- Sharper focus on asset protection, fraud indicators and lending practices.
- Modelled on CARO 2020, so auditors familiar with company audits will find the structure familiar.
Legal background
The Multi-State Co-operative Societies (Amendment) Act, 2023 empowered the Central Government under Section 73(6) to prescribe auditing and accounting standards for multi-state cooperative societies. The order has been formulated under this provision, based on 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 themselves.
What auditors should do now
Auditors of covered societies should study the new format, align their audit checklists and documentation with its reporting clauses, and brief their teams on the Yes/No reporting discipline. Societies approaching the threshold should strengthen compliance systems, record-keeping and governance frameworks now, rather than waiting for the order to apply to them. For professional assistance with cooperative society audits, talk to our team or explore our services.
Frequently asked questions
What is MSCARO 2026?
It is the Multi-State Co-operative Societies (Auditor’s Report) Order, 2026, notified by the Ministry of Cooperation. It prescribes a standardised format for statutory auditors of large multi-state cooperative societies, modelled on CARO for companies.
Which cooperative societies does MSCARO apply to?
In the first phase, it applies to larger multi-state cooperative societies crossing the Rs 1,000 crore threshold. Coverage will expand in later phases.
Is MSCARO mandatory?
Yes, for the societies covered under each phase, auditors must report in the MSCARO format as part of the statutory audit.
How is MSCARO different from CARO?
CARO applies to companies under the Companies Act, 2013. MSCARO applies to multi-state cooperative societies under the MSCS Act, with clauses tailored to cooperative governance, member transactions and the cooperative business model.
When does MSCARO 2026 take effect?
The PIB release does not specify an effective date or first applicable financial year. It mandates phased implementation, with the initial phase covering societies crossing the Rs 1,000 crore threshold and the long-term objective of extending the framework to societies crossing Rs 50 crore in relevant financial parameters.
About the Author
Written and reviewed by CA Anshul Karwa, Chartered Accountant (DISA-qualified) associated with Karwa & Associates, Chartered Accountants, Jaipur. He was associated with the expert committee that designed the MSCARO framework.