Audit of Charitable Societies/Trusts/Organizations | Commerce & Accountancy Optional Notes for UPSC PDF Download

When auditing a charitable institution, the following areas should be closely examined:

General

• Review the constitution that governs the charitable institution's operations.
• Confirm that the institution is adhering to the legal requirements of its establishment.
• Assess the internal control system, especially in terms of accounting for collected funds.
• Thoroughly verify the income and ensure that all received amounts are promptly deposited in the bank.
• Scrutinize the Trust Deed or Regulations as applicable.

Subscriptions and Donations

• Determine any changes in annual or life membership subscription amounts.
• Ensure official receipts are issued and adequately controlled.
• Reconcile receipt books with the cash book.
• Verify the total collections against the printed list of subscriptions and donations.
• Review the handling of funds from box collections, flag days, etc.
• Check the total subscriptions and donations against figures published in reports.

Legacies

Verify the amounts received against correspondence and available information.

Grants

• Verify the amount received with relevant correspondence, receipts, and minute books.
• Obtain a certificate from a responsible official showing the amount of grants received.

Investments Income

• Reconcile amounts received with dividend and interest counterfoils.
• Verify interest calculations on securities with fixed rates.
• Ensure the appropriate dividend is received for investments sold or purchased.

Rent

• Review the rent roll and inspect tenancy agreements.
• Reconcile rent to the rent roll from receipt book counterfoils and cash book totals.

Special Functions

• Examine receipts and expenses for any special functions held in aid of the charity.

Income Tax Refunds

• Verify that any income tax deducted from investment income has been refunded, as charitable institutions are exempt from income tax.

Expenditure

• Payments made for grants are supported by appropriate documentation and that these grants align with the charitable objectives of the institution, with no personal benefits accruing to any trustee, director, or member of the Managing Committee.

• The schedules of securities and inventories of both movable and immovable properties are verified through inspections of securities, title deeds, and physical verifications on a sampling basis.

• Cash and bank payments are verified.

• Contributions made for specific purposes are utilized as intended.