An NGO Audit is a comprehensive examination of the financial and operational records of a non-governmental organization (NGO) to ensure compliance with legal and regulatory requirements. It is essential for maintaining transparency, credibility, and accountability in the organization’s operations. The audit process includes reviewing income, expenditures, funding sources, and the utilization of funds for the intended purposes.
Key Features of NGO Audit:
Compliance Check:
Ensures adherence to laws like the Income Tax Act, 1961, Foreign Contribution (Regulation) Act (FCRA), 2010, and other applicable regulations.
Verifies compliance with 80G and 12A certifications for tax exemptions.
Financial Transparency:
Evaluates whether funds received from donors, grants, or government schemes have been utilized appropriately.
Reviews income and expenditure statements, balance sheets, and fund flow.
FCRA Audit (if applicable):
For NGOs receiving foreign donations, ensures compliance with FCRA rules.
Examines FCRA bank accounts, fund utilization, and proper reporting to the Ministry of Home Affairs.
Grant Utilization Reports:
Prepares grant-specific utilization reports for donors and funding agencies.
Verifies that funds are used for the specific projects or objectives outlined.
Internal Control Review:
Assesses internal control systems to minimize risks of financial mismanagement or fraud.
Documentation and Filing:
Assists in preparing the audit report for submission to relevant authorities, donors, and stakeholders.
Guides NGOs on filing income tax returns and annual compliance reports.
Benefits of NGO Audit:
Enhances donor confidence and facilitates continued funding.
Reduces the risk of legal penalties by ensuring compliance with statutory obligations.
Strengthens internal systems and promotes better financial management.