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NGO AUDIT

Types of the Audit provided for the NGO:

  1. External Audit: An Independent auditor carries out the audit and examination of sample of records an gives opinion on fairness and credibility of Financial statements.

  2. Internal Audit: An expert hired for such audit carries out the audit or by employees themselves. Right from checking the Policies and procedures being followed in practice to provide trustees up to date information on risk management.

  3. Investigative Audit: When it is suspected that there is an issues of fraud, The auditor investigates all he facts in check and provides evidence for further action to be taken.

  4. Donor Audit: External auditors or the organization or the donor themselves carries out the audit to ensure that their funds or donations are being duly utilized. A successful NGO audit is often a requirement for further funding.

A Workflow procedure of the NGO audit conduct:

When an independent CA audits the accounts, it sums up its validity in the eyes of the public.

The procedure of our auditing is as follows:

  1. Firstly, The Auditor studies the MOA of the NGO to learn about the activities and services.

  2. The Auditor checks the donations received form any individual or institutions to check the use of such donation from the previous data, accounts and trial balance.

  3. With all the documents submitted for the audit, the auditor checks the receipts and payments accounts, income and expenditure accounts, the total amount NGO has received and its expenses. He also checks the nature of expenses.

  4. The Auditor checks the use of the Government's grant received by NGOs from Foreign institutions and and a proper account is maintained for it.  The auditor checks if it is as per the rules and regulations or not and provides guidance on legal compliances on Foreign Contribution Regulation Act – Registration and Returns.

  5.  The Auditor during an NGO Audit must evaluate the decisions taken by the executives, conducts a background check of all the executives and officials of the NGO and other people who are connected with the NGO.

  6. The Auditor must make physical verification of assets ratifying with store ledger. The auditor also checks the liabilities and proper transfer of them.

  7. Ensuring there is compliance under the Societies Act, the Indian Trust Act, etc. And ensuring the legality of NGOs, Income Tax Act (Income-tax Registration & Returns), ESIC, 80G Registration under the Income-tax Act.

  8. The auditor executes project evaluations with the experts in the particular field, while designing and implementing accounting procedures and policies.

  9. The auditor Guides the NGO in Planning and also in budgeting the proposal of any developmental activity.

  10. The auditor executes a Cost analysis of the socio-economic project based on the financial data for an NGO and monitors union and linkage of program activities and financial management of the NGO’s.

  11. The auditor, at last, prepares the audit report after thoroughly verifying and checking all the financial statements and the following list of documents:

  • Auditor's report

  • Balance Sheet (Signed and stamped by the CA/auditor), signed by your Chief Functionary & Board Members

  • Notes to Accounts (including significant accounting policies). Also your organization’s registration details, date of filing income tax return, and FCRA return and details of 12A, 80G, 35AC, and FCRA registration.

  • Fixed Assets Schedule.

  • The action report on issues raised on the previous year’s report.

  • Preparation of consolidated statements for the organization as a whole.

  • Complete Schedules if your balance sheet, income, and expenditure account mention the same. Each page should be stamped along with the initials of the CA.

  • Payment of fees or salary or remuneration or reimbursements to Trustees or Governing Body members or Directors should be tracked and reported separately.

  • Income and Expenditure Account (Signed and stamped by the CA/auditor), signed by your Chief Functionary & Board Members

  • Receipts and Payment Account. These are mandatory if you have an FCRA registration. (Signed and stamped by the CA/auditor), signed by your Chief Functionary & Board Members.

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