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ngo

VIEWS: 810 PAGES: 40

									21st December, 2009
       NIRC of ICAI
         New Delhi



   CA SUDHIR VARMA
      FCA; CIA(USA)
Formation of NGO’s


                CA SUDHIR VARMA
                     FCA; CIA(USA)
Constituents

 1. Trust   - Registered document
 2. Society - Registrar of Societies
 3. Company - Sec. 25 of the Companies Act, 1956




                                        CA SUDHIR VARMA
                                           FCA; CIA(USA)
Trust
 1.   No separate Act
 2.   Trust Deeds can be registered
 3.   Settler
 4.   Corpus
 5.   Trustees
 6.   Trust Deed


                                      CA SUDHIR VARMA
                                         FCA; CIA(USA)
Trust Deed
 1.   On a stamp paper as per stamp duty payable on
      the corpus amount.
 2.   Must clearly and broadly define objects
 3.   Strength of Board of Trustees
 4.   Powers of the Trustees / remuneration / benefits
 5.   Broad guidelines for management of trust
 6.   On dissolution

                                            CA SUDHIR VARMA
                                                FCA; CIA(USA)
Societies
 Status
 - Delhi / State
 - All India




                   CA SUDHIR VARMA
                      FCA; CIA(USA)
Societies
 1. In state level at least 7 promoters (not blood
    related)
 2. In all India level at least 8 promoters from 8
    different states of India




                                            CA SUDHIR VARMA
                                                FCA; CIA(USA)
Societies
 1.   Memorandum of Association
      - name
      - objects
      - profits/benefits to promoters/board members
      - dissolution clause
      - subscribers


                                           CA SUDHIR VARMA
                                              FCA; CIA(USA)
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


                                              CA SUDHIR VARMA
                                                  FCA; CIA(USA)
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

                                             CA SUDHIR VARMA
                                                FCA; CIA(USA)
Societies
 1. Certificate of Registration
 2. Certified copies from Registrar of
    - Memorandum of Association
    - Rules & Regulations




                                         CA SUDHIR VARMA
                                            FCA; CIA(USA)
Societies
 1.   Registrations
      - PAN
      - TAN
      - u/s 12AA of Income Tax Act
      - u/s 80G of Income Tax Act
      - IEC code
      - VAT

                                     CA SUDHIR VARMA
                                        FCA; CIA(USA)
Societies
 1. Establish bank account
 2. Deposit membership fee
 3. Start members register




                             CA SUDHIR VARMA
                                FCA; CIA(USA)
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

                                            CA SUDHIR VARMA
                                                FCA; CIA(USA)
System of Accounts

 Accrual system of accounts
 Cash system of accounts




                               CA SUDHIR VARMA
                                  FCA; CIA(USA)
System of Accounts

 FOREIGN FUNDS
 LOCAL FUNDS
   - Special projects
   - General
 REVENUES



                         CA SUDHIR VARMA
                            FCA; CIA(USA)
BALANCE SHEET

Accounting of Fixed Assets
 Fully donated
 Partly donated/subsidized
 Bought from specific grants
 Depreciation


                                CA SUDHIR VARMA
                                   FCA; CIA(USA)
BALANCE SHEET

Investments
 Approved List
 Corpus Investments
 Special Fund Investments
 Interest Accrued


                             CA SUDHIR VARMA
                                FCA; CIA(USA)
BALANCE SHEET
Current Assets
 Cash in hand
 Bank balances
 Inventories
 Receivables
 Reimbursable
 Advances

                  CA SUDHIR VARMA
                     FCA; CIA(USA)
BALANCE SHEET
Current Liabilities

 Payables
 Statutory dues
   - Provident fund
   - TDS
   - Others

                       CA SUDHIR VARMA
                          FCA; CIA(USA)
BALANCE SHEET
Capital Fund
 General Fund
 Corpus Fund
     - interest accrued on corpus investments
     - transfer to corpus
   Specific Funds
     - building fund
     - others
                                             CA SUDHIR VARMA
                                                 FCA; CIA(USA)
BALANCE SHEET

Project Funds
(to the extent unutilized)
 Project balances
 Carry Forward for specific projects
 Board Resolutions with Form-10


                                        CA SUDHIR VARMA
                                           FCA; CIA(USA)
BALANCE SHEET

Reserves

 Facility fund
 Staff benefit fund
 Other specific funds



                         CA SUDHIR VARMA
                            FCA; CIA(USA)
INCOME & EXPENDITURE A/C
Incomes
 Donor wise accounting
 Incomes from revenue
 Surplus from projects closed
 R & D receipts


                                 CA SUDHIR VARMA
                                    FCA; CIA(USA)
INCOME & EXPENDITURE A/C
Expenditure

 Project by exp.
 Program exp.
 Administration/overhead exp.
 R & D exp.

                                 CA SUDHIR VARMA
                                    FCA; CIA(USA)
Audit of NGO’s


                 CA SUDHIR VARMA
                    FCA; CIA(USA)
Types of Audit
1.   Transaction based audit
2.   System / Risk based audit
3.   Project based audit
4.   Donor based audit
5.   Efficiency audit
6.   Compliance / Statutory audit
     - Income Tax
     - FCRA
     - Registering authority

                                    CA SUDHIR VARMA
                                       FCA; CIA(USA)
Engagement
1.   Appointment by appropriate authority
2.   Engagement letter
3.   Scope of audit
4.   Reporting requirements
5.   Fee



                                            CA SUDHIR VARMA
                                                FCA; CIA(USA
Audit approach

1.   “Knowledge of business” objects ; activities
2.   Audit objectives
3.   Audit plan
4.   Audit process
5.   Resources


                                               CA SUDHIR VARMA
                                                    FCA; CIA(USA
Project based audit

1. Understand activity under the project
2. Budget for the project
3. Separate bank account / books of accounts
4. Direct revenues from the project
   - grants
   - donations
   - revenue incomes
5. Direct project expenses – nature
6. Allocation of expenses to projects
7. Projects utilization certificates
                                               CA SUDHIR VARMA
                                                  FCA; CIA(USA)
Donor based audit

1. Donor sanction letter
2. Terms & Conditions
3. Budget
4. Reporting requirements




                            CA SUDHIR VARMA
                               FCA; CIA(USA)
1.   Corpus / Endowment fund
2.   Unutilized Grants
3.   Separate books of accounts for
     - foreign grants
     - local grants
     - revenue
4.   Accrual vs cash system of accounts
5.   Receipts and payments accounts


                                          CA SUDHIR VARMA
                                             FCA; CIA(USA)
Efficiency audit

1.   Donors / Governing body / Trustees
2.   Verification of expenses beyond accounting
3.   External help of specialists
4.   Common sense / matured judgment
5.   Team leaders



                                             CA SUDHIR VARMA
                                                  FCA; CIA(USA)
Computerized Environment

1.   Size of NGO / No. of transactions
2.   Familiarity with software in use
3.   Asses software controls
4.   Use auditing software
5.   Remain abreast with technology


                                         CA SUDHIR VARMA
                                            FCA; CIA(USA)
Statutory Compliances
1. Income Tax Act
2. FCRA / FEMA / RBI
3. Registration laws
4. Labor laws
5. VAT / Service Tax
6. Commercial laws
7. Protection laws
8. General laws
                        CA SUDHIR VARMA
                           FCA; CIA(USA)
Auditing and assurance standards
AAS1   Basic Principles Governing an Audit
AAS2   Objectives and scope of the Audit
       of Financial Statements
AAS3   Documentation
AAS4   The Auditor’s Responsibility to consider Fraud and
       Error is an Audit of Financial Statements
AAS5   Audit Evidence
AAS6   Risk Assessments and Internal Control
AAS7   Relying Upon the work of an Internal Auditor
AAS8   Audit Planning
AAS9   Using the Work of another Auditor

                                                CA SUDHIR VARMA
                                                     FCA; CIA(USA)
Auditing and assurance standards
AAS10   Using the Work of an Expert
AAS11   Representations by Management
AAS12   Responsibility of Joint Auditors
AAS13   Audit Materiality
AAS14   Analytical Procedures
AAS15   Audit Sampling
AAS16   Going Concern
AAS17   Quality Control for Audit Work
AAS18   Auditing of Accounting Estimates
AAS19   Subsequent Events
AAS20   Knowledge of the Business
                                           CA SUDHIR VARMA
                                              FCA; CIA(USA)
Auditing and assurance standards
AAS21   Consideration of Laws and Regulations in an
        Audit of Financial Statements
AAS22   Initial Engagements – Opening Balances
AAS23   Related Parties
AAS24   Audit Considerations Relating to Entities Using
        Service Organizations
AAS25   Comparatives
AAS26   Terms of Audit Engagements
AAS27   Communication of Audit Matters with Those
        Charged with Governance
AAS28   The Auditor’s report on Financial Statements

                                                 CA SUDHIR VARMA
                                                      FCA; CIA(USA)
Auditing and assurance standards
 AAS29   Audit in a Computer information Systems
         Environment
 AAS30   External Confirmations
 AAS31   Engagements to Compile Financial Information
 AAS32   Engagements to Perform Agreed – Upon
         Procedures Regarding Financial Statements
 AAS33   Engagements to Review Financial Statements
 AAS34   Audit Evidence – Additional Consideration for
         Specific Items
 AAS35   The Examination of Prospective Financial
         Information

                                             CA SUDHIR VARMA
                                                 FCA; CIA(USA)
Q&A
Thank you




            CA SUDHIR VARMA
               FCA; CIA(USA)

								
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