CAs told to flag suspicious funding, transactions of NGOs
The government has instructed chartered accountants (CAs) to flag any discrepancies related to route and sources of funding or any suspicious financial transaction during the auditing of accounts of NGOs.
As per a notification issued by the Ministry of Home Affairs (MHA) in December 2024, CAs have been asked to report Foreign Contribution (Regulation) Act, 2010 (FCRA) violations by NGOs.
The Institute of Chartered Accountants of India (ICAI) has acknowledged that as per the MHA notification, it would flag any such irregularity found during the audit of NGOs. The MHA notification specifically mentioned that CAs conducting audit of NGOs, will have to specify if the entity violated any provisions of FCRA.
As per the legislation, a CA has to certify if an NGO has used the foreign funding for the purpose it was registered for, while its annual statements are also to be uploaded on the FCRA portal.
In addition to this, the CAs, as per the FCRA provisions, will have to mention other details of NGOs like their names, email IDs and registration numbers at the time of issuing audit certificates, and most significantly mention the violation committed by the entity and its details.
Also, in case the NGO has not committed any violations, then this too needs to be specified by the auditors. In the last 10 years, thousands of NGOs have lost their FCRA registration for violating norms under the legislation.
