Tag Archive for: Funding

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New Updates related to CSR Audit

Utilisation Certificate is asked by every Funding Agency and CSR funding Corporates. Generally, NGO frequently submits various reports of the implementing of the project including financial spent and position. At the end of the project or year-end, an audited utilisation certificate is asked, which includes expenses spent on the project against budget and remaining fund balance.

No Uniform format for UC

But the problem with UC is that there is no proper format suggested in any act or law. Thus, every auditor issued UC as per their format or funding agency insist in a particular format. This happens with CSR corporate also. And it is very difficult for statutory auditor of corporate to rely upon UC.

ICAI issued Advisory

So, ICAI (Institute of Chartered Accountants) has issued an advisory to its member regarding this recently. In such advisory, it is instructed to member / CAs to provide UC in a particular format of the report which is called “Independent Practitioner’s Report on Utilisation Funds” . Also, ICAI has advised such companies to obtain such Report from NGOs / CSR entity.

Download Advisory from Here

Lets talk about Report

It is usual audit report, but includes following :-

  • Management (NGO) Responsibility
  • Auditor’s Responsibility
  • Opinion of Auditor

So, under this report, Auditor has to give audit report after considering following :-

  • Checked whether the entity has incurred amounts on the Corporate Social Responsibility (CSR) activities specified in Schedule VII of the Companies Act, 2013.
  • Traced and agreed the amounts in the attached Statement.
  • Traced the amount spent on CSR activities from the bank statements / cash book of the entity.
  • Checked whether amounts spent on CSR activities have been adequately disclosed in the financial statements.
  • Obtained written representation from the management of the entity on the total amount unspent and their plan to disburse the unspent amount related to the project
  • Tested the arithmetical and clerical accuracy of the Statement

Conclusion

Thus, now onwards, most of corporates will ask NGOs to submit UC in this particular format for CSR projects.

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Rotation of Board Members in NGO

Do your organization have “Board Rotation Policy” ? Many funding agency and corporate asking this question before giving funds. It sounds irrelevant, but it is not. Every donor wants 100% utilization of single rupee, he donates to you. And every donor wants that an NGO should have highly effective governance. Today let us discuss this issue of rotation of board members or trustees in NGO from various view points, get your pregnancy pillow and get comfortable.

Is it Mandatory?

First and obvious question is about its legal implications. As, there are various acts in india under which an organization can be registered, there is no such specific rule regarding board member rotation and about timing. However, this issue is mostly addressed in the Trust Deed or Memorandum of NGO. If there is a clause in your Memorandum or Trust Deed regarding change or rotation of Board Members, you must follow it strictly.

Of-course, it is beneficial

It is not mandatory to rotate board members of NGO, but the benefits of such policy are very obvious that one should follow this practice. First and foremost, it shows good governance prevail in your NGOs, if you have rotation policy at regular interval. Second, it gives impression that, your NGO is having separate identity than only one or two individual founder members. It gives NGO more life span, when second generation leaders are trained this way.

Rotation or Change?

Depends upon the scenario and what mentioned in Trust Deed. However, only changing designation of same persons over years will definitely gives sense to Donor about just implementing policy on paper and not in true senses. Thus, it is better to have a proper policy for mixture of both rotation and change.

What is best “Board Rotation Policy”

The best policy is one which include robust period for the person to be in the board of the trust. Good boards should always have agreed terms of office so that there is a regular turnover of trustees and boards remain vibrant. Two terms of three years with a review at the end of the first term is fairly typical. NGOs should adopt this as best practice.

Let the world knows – Disclouser

Once you have a policy for board rotation in your NGO, it is best practice to put the same in your Annual Return under some Compliance or Good Practice page.

Hope this will help you in your NGO, if you have any question,  you can ask here or chat with us. Also your comments are welcome on the above subjects.

 

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How to get CSR Funding for your NGO ?- Program Quality

How to get CSR funding for your NGO? – PART 1

We have seen in last blog here (How to get CSR Funding for NGO?) , what NGO should not do to get CSR funds. Let us see now what NGO should do to get CSR funding. How your should prepared your NGO for CSR funding. One of the important aspect is how effectively your NGO implement the given project i.e. Program Quality.

Program Quality

Obviously, as a Chartered Accountant, I can not suggest about how to implement program effectively, but yes, I can suggest on how to maintain documents in such a manner, so that it can easily draw an idea about NGO working.

Past and Current Programs

Programs, which are completed in last five years should have been documented properly. There has to be proper file for each program containing all the documents starting from agreement, budget, all financial utilization certificates, quarterly reports, photographs and note on impact of the program. I suggest to have a “Program Closure Card”, a brief summary of Program. Please see below example.

This is illustration how Program Closure Card look

This is illustration how Program Closure Card look

 

Future Program

Every company ask full project plan for which you need CSR fund. Thus, NGO should have keep ready such kind of different project plans – mainly divided in two parts, short term plans and long term plans. Many CSR companies even provide funding for ongoing project or contribute in Long Term Project Plan of NGO.

Coming Soon – How to get CSR funding for your NGO? – PART 3

 

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