About NGO Audit

Since non-profit organizations (NGOs) are charitable establishments that rely on donations from the public to fund their social programs it is crucial that they prepare their financial statements and accounts in order to demonstrate to the public the legitimacy of their work and performance. In the publics perspective the validity of these accounts and statements is summed up when they undergo auditing by an independent chartered accountant. 

Auditing has a very straightforward process. An auditor checks all the books with all historical data first then the accounts and trial balance much like when auditing the accounts of other businesses. The verification of income and expenditure accounts as well as receipt and payment accounts is an essential and crucial part of the NGO auditing process. A certified public accountant verifies the amount of funds received by the NGO their sources their voucher and the various expenses incurred by the organization. Additionally, he examines the type of expenses—capital or revenue-related. The audit report is created by an auditor following a comprehensive review and validation of all financial statements including social accounting. various actions an auditor performs when conducting an audit. 

Auditors must verify that the NGO is legally operating and that it complies with all applicable laws including the Labor Law the Income-tax Act the ESIC and others. Auditors must confirm and guarantee that all monies received by non-profit organizations—such as donations grants and subsidies from the government—come from legal sources and aren’t leftover illicit funds. In order to properly and neatly record government grants a separate account must be opened. The auditor must also confirm the NGOs financial investments and outlays. An NGO is required to uphold total transparency regarding the funds used in different fields. 

An NGO that wants to ensure that its funds are used legally and only to further its single mission statement must maintain an accurate record of every rupee it spends. This record is crucial to the inspection process. Auditors are required to verify that Sections 12AA and 80G apply to non-governmental organizations and that all donors who have made donations are granted exemptions. In order to do this the donation register must be used to authenticate the counterfoils of the receipts that donors receive. The auditors also conduct background checks on all NGO executive’s officials and individuals who are actively involved with the organization. financial audit types for non-governmental organizations. 

In order to independently assess an NGOs operation and confirm that it is operating in compliance with the law four different forms of financial audits are conducted on behalf of NGO. The following are the different types of audits.