ngo’s formation, accounts & audit

Post on 11-Jan-2016

30 Views

Category:

Documents

1 Downloads

Preview:

Click to see full reader

DESCRIPTION

NGO’s FORMATION, ACCOUNTS & AUDIT. 21 st December, 2009 NIRC of ICAI New Delhi. CA SUDHIR VARMA FCA; CIA(USA). Formation of NGO’s. CA SUDHIR VARMA FCA; CIA(USA). Constituents. Trust - Registered document Society - Registrar of Societies - PowerPoint PPT Presentation

TRANSCRIPT

NGO’s FORMATION, ACCOUNTS & AUDIT

21st December, 2009NIRC of ICAI

New Delhi

CA SUDHIR VARMAFCA; CIA(USA)

Formation of NGO’s

CA SUDHIR VARMAFCA; CIA(USA)

Constituents

1. Trust - Registered document2. Society - Registrar of Societies3. Company - Sec. 25 of the Companies Act,

1956

CA SUDHIR VARMAFCA; CIA(USA)

Trust

1. No separate Act2. Trust Deeds can be registered3. Settler 4. Corpus5. Trustees 6. Trust Deed

CA SUDHIR VARMAFCA; CIA(USA)

Trust Deed

1. On a stamp paper as per stamp duty payable on the corpus amount.

2. Must clearly and broadly define objects3. Strength of Board of Trustees4. Powers of the Trustees / remuneration /

benefits5. Broad guidelines for management of

trust6. On dissolution

CA SUDHIR VARMAFCA; CIA(USA)

Societies

Status- Delhi / State- All India

CA SUDHIR VARMAFCA; 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 VARMAFCA; CIA(USA)

Societies

1. Memorandum of Association- name- objects- profits/benefits to promoters/board members- dissolution clause- subscribers

CA SUDHIR VARMAFCA; 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 VARMAFCA; CIA(USA)

Societies1. 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 VARMAFCA; CIA(USA)

Societies

1. Certificate of Registration2. Certified copies from Registrar of

- Memorandum of Association- Rules & Regulations

CA SUDHIR VARMAFCA; 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 VARMAFCA; CIA(USA)

Societies

1. Establish bank account2. Deposit membership fee3. Start members register

CA SUDHIR VARMAFCA; 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 VARMAFCA; CIA(USA)

System of Accounts

Accrual system of accountsCash system of accounts

CA SUDHIR VARMAFCA; CIA(USA)

System of Accounts

FOREIGN FUNDS LOCAL FUNDS - Special projects - General REVENUES

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEET

Accounting of Fixed Assets

Fully donated Partly donated/subsidizedBought from specific grantsDepreciation

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEET

InvestmentsApproved ListCorpus Investments Special Fund Investments Interest Accrued

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEETCurrent Assets

Cash in handBank balancesInventoriesReceivablesReimbursableAdvances

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEETCurrent Liabilities

PayablesStatutory dues - Provident fund - TDS - Others

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEETCapital Fund

General Fund Corpus Fund - interest accrued on corpus investments - transfer to corpus Specific Funds - building fund - others

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEET

Project Funds(to the extent unutilized)

Project balances Carry Forward for specific projectsBoard Resolutions with Form-10

CA SUDHIR VARMAFCA; CIA(USA)

BALANCE SHEET

Reserves

Facility fundStaff benefit fundOther specific funds

CA SUDHIR VARMAFCA; CIA(USA)

INCOME & EXPENDITURE A/CIncomesDonor wise accountingIncomes from revenue Surplus from projects closedR & D receipts

CA SUDHIR VARMAFCA; CIA(USA)

INCOME & EXPENDITURE A/CExpenditure

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

CA SUDHIR VARMAFCA; CIA(USA)

Audit of NGO’s

CA SUDHIR VARMAFCA; CIA(USA)

Types of Audit1. Transaction based audit2. System / Risk based audit3. Project based audit4. Donor based audit5. Efficiency audit6. Compliance / Statutory audit

- Income Tax - FCRA- Registering authority

CA SUDHIR VARMAFCA; CIA(USA)

Engagement

1. Appointment by appropriate authority2. Engagement letter3. Scope of audit4. Reporting requirements5. Fee

CA SUDHIR VARMAFCA; CIA(USA

Audit approach

1. “Knowledge of business” objects ; activities2. Audit objectives3. Audit plan 4. Audit process5. Resources

CA SUDHIR VARMAFCA; CIA(USA

Project based audit

1. Understand activity under the project2. Budget for the project3. Separate bank account / books of accounts4. Direct revenues from the project

- grants - donations- revenue incomes

5. Direct project expenses – nature6. Allocation of expenses to projects7. Projects utilization certificates CA SUDHIR VARMA

FCA; CIA(USA)

Donor based audit

1. Donor sanction letter2. Terms & Conditions3. Budget4. Reporting requirements

CA SUDHIR VARMAFCA; CIA(USA)

1. Corpus / Endowment fund2. Unutilized Grants3. Separate books of accounts for

- foreign grants- local grants- revenue

4. Accrual vs cash system of accounts5. Receipts and payments accounts

CA SUDHIR VARMAFCA; CIA(USA)

Efficiency audit

1. Donors / Governing body / Trustees2. Verification of expenses beyond accounting 3. External help of specialists4. Common sense / matured judgment5. Team leaders

CA SUDHIR VARMAFCA; CIA(USA)

Computerized Environment

1. Size of NGO / No. of transactions2. Familiarity with software in use3. Asses software controls4. Use auditing software5. Remain abreast with technology

CA SUDHIR VARMAFCA; CIA(USA)

Statutory Compliances

1. Income Tax Act2. FCRA / FEMA / RBI3. Registration laws4. Labor laws5. VAT / Service Tax6. Commercial laws7. Protection laws8. General laws

CA SUDHIR VARMAFCA; CIA(USA)

Auditing and assurance standards

AAS1 Basic Principles Governing an AuditAAS2 Objectives and scope of the Audit

of Financial StatementsAAS3 DocumentationAAS4 The Auditor’s Responsibility to consider

Fraud and Error is an Audit of Financial Statements

AAS5 Audit EvidenceAAS6 Risk Assessments and Internal ControlAAS7 Relying Upon the work of an Internal AuditorAAS8 Audit PlanningAAS9 Using the Work of another Auditor

CA SUDHIR VARMAFCA; CIA(USA)

Auditing and assurance standards

AAS10 Using the Work of an ExpertAAS11 Representations by ManagementAAS12 Responsibility of Joint AuditorsAAS13 Audit MaterialityAAS14 Analytical ProceduresAAS15 Audit SamplingAAS16 Going ConcernAAS17 Quality Control for Audit WorkAAS18 Auditing of Accounting EstimatesAAS19 Subsequent EventsAAS20 Knowledge of the Business

CA SUDHIR VARMAFCA; CIA(USA)

Auditing and assurance standards

AAS21 Consideration of Laws and Regulations in an Audit of Financial Statements

AAS22 Initial Engagements – Opening BalancesAAS23 Related PartiesAAS24 Audit Considerations Relating to Entities

Using Service OrganizationsAAS25 ComparativesAAS26 Terms of Audit EngagementsAAS27 Communication of Audit Matters with Those

Charged with GovernanceAAS28 The Auditor’s report on Financial Statements

CA SUDHIR VARMAFCA; CIA(USA)

Auditing and assurance standards

AAS29 Audit in a Computer information Systems Environment

AAS30 External ConfirmationsAAS31 Engagements to Compile Financial

InformationAAS32 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 & AThank you

CA SUDHIR VARMAFCA; CIA(USA)

top related