Professional Documents
Culture Documents
23rd October, 2009 East Delhi CA CPE Study Circle NIRC of ICAI New Delhi
CA SUDHIR VARMA
FCA; CIA (USA)
Formation of NGOs
Constituents
1. 2. 3.
Trust - Registered document Society - Registrar of Societies Company - Sec. 25 of the Companies Act, 1956
Trust
1. 2. 3. 4. 5.
6.
No separate Act Trust Deeds can be registered Settler Corpus Trustees Trust Deed
Trust Deed
1.
2. 3. 4.
5. 6.
On a stamp paper as per stamp duty payable on the corpus amount. Must clearly and broadly define objects Strength of Board of Trustees Powers of the Trustees / remuneration / benefits Broad guidelines for management of trust On dissolution
Societies
Status - Delhi / state - All India
Societies
1.
2.
In state level at least 7 promoters (not blood related) In all India level at least 8 promoters from 8 different states of India
Societies
1.
Memorandum of Association - name - objects - profits/benefits to promoters/board members - dissolution clause - subscribers
Societies
1.
Rules & Regulations - define rules of membership - define rules for elections - define powers, duties and responsibilities of the board and each office bearer - define broad parameters of governance
Societies
1.
Registration - covering letter in a file cover - power of attorney - affidavit from secretary / president - NOC for registered office - Memorandum of Association & Rules and Regulations signed by each promoter on each page - proofs of addresses for all promoters
Societies
1. 2.
Certificate of Registration Certified copies from Registrar of - Memorandum of Association - Rules & Regulations
Societies
1.
Registrations - PAN - TAN - u/s 12AA of Income Tax Act - u/s 80G of Income Tax Act - IEC code - VAT
Societies
1. 2.
3.
Companies
1.
Registration process as usual - apply for name of approval - apply for license to operate as a company registered u/s 25 of the Companies Act 1956 - after obtaining license submit papers for incorporation - certificate of incorporation issued to mention that the company is registered u/s 25 of the Companies Act 1956
Audit of NGOs
Types of Audit
1. 2. 3. 4. 5. 6. Transaction based audit System / Risk based audit Project based audit Donor based audit Efficiency audit Compliance / Statutory audit - Income Tax - FCRA - Registering authority
Engagement
1. 2. 3. 4. 5.
Appointment by appropriate authority Engagement letter Scope of audit Reporting requirements Fee
Audit approach
1. 2. 3. 4. 5.
Knowledge of business objects ; activities Audit objectives Audit plan Audit process Resources
Transaction based audit System / Risk based audit Compliance / Statutory audit (as usual)
4.
5.
6. 7.
Understand activity under the project Budget for the project Separate bank account / books of accounts Direct revenues from the project - grants - donations - revenue incomes Direct project expenses nature Allocation of expenses to projects Projects utilization certificates
1. 2. 3.
4.
5.
Corpus / Endowment fund Unutilized Grants Separate books of accounts for - foreign grants - local grants - revenue Accrual vs cash system of accounts Receipts and payments accounts
Efficiency audit
1. 2. 3. 4. 5.
Donors / Governing body / Trustees Verification of expenses beyond accounting External help of specialists Common sense / matured judgment Team leaders
Computerized Environment
1. 2. 3. 4. 5.
Size of NGO / No. of transactions Familiarity with software in use Asses software controls Use auditing softwares Remain abreast with technology
Statutory Compliances
Income Tax Act 2. FCRA / FEMA / RBI 3. Registration laws 4. Labour laws 5. VAT / Service Tax 6. Commercial laws 7. Protection laws 8. General laws
1.
Q&A
Thank you
SUDHIR VARMA FCA; CIA (USA)