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Audit of charitable trust

Audit of charitable trust. In this issue. Auditors duty as to check Constitution of trust Various aspects of authorization receipts & expenditures Audit of liabilities Audit of assets Conduct analytical review Report to the management. CONSTITUTION OF TRUST. Check up the

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Audit of charitable trust

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  1. Audit of charitable trust

  2. In this issue • Auditors duty as to check • Constitution of trust • Various aspects of authorization • receipts & expenditures • Audit of liabilities • Audit of assets • Conduct analytical review • Report to the management

  3. CONSTITUTION OF TRUST • Check up the • Constitution of the trust • Byelaws, rules & regulations of the trust • Object for which trust is settled • Application of the fund of the trust • Minutes of the board of trustees • Provisions of trust act of concerned state

  4. Receipt RECEIPT CONTRIBUTION & GRANT FUND RAISING PROGRAMME MEMBERSHIP FEES SUBSCRIPTION

  5. CONTRIBUTIONS • Check for the agreement with donor • Check for the grant letters • Check the accounting for the fund received • Check applicability of the fcra law • Verify donations with copies of receipt issued • See for any conditions attached to contributions • Verify income of the interest & dividend • Check the accountability for TDS if any

  6. FUND-RAISING PROGRAMME • Verify in details the internal control system • See the responsible persons for the collection of the fund • See for the mode of the receipts • Ensure all the collections are accounted for & deposited in daily basis • Check up the receipt with the documentary evidence

  7. Membership fees • Check for the fees received with the membership register • Ensure proper classification is made between entrance & annual fees • Reconcile fees received with the fees to be received during the year • Vouch for fees received with duplicate copies of the receipt issued

  8. subscription • Check the amount with subscription register & receipt issued • Reconcile subscription received with the dispatch of corresponding magazine • Check the receipt with subscription rate schedule • See for the arrears of subscription & steps taken to recover • See for the subscription in advance & its adjustment in the year of receipt

  9. expenditure EXPENDITURE PROGRAMME EXP. ESTABLISHMENT EXP.

  10. Programme & project expenses • Verify agreement with donor to ascertain the condition for undertaking project • Ascertain whether I.C. Works systematically in this regard • Ensure income tax is deducted & deposited • Ensue return is filed properly in case of payment

  11. ESTABLISHMENT EXPENSES • Verify PF, life insurance, and administrative charges are deducted • Check for office & administrative exps. • With reference to relevant vouchers & • Relevant supporting documents • Check for the revenue & capital expenditures • Ensure trustees are not benefited out of the institution

  12. AUDIT OF LIABILITIES • Vouch contribution & grant towards corpus • Verify all contribution in kind is duly recorded • Vouch special contribution have been utilized for specified purpose • Vouch for the earmarked funds • Verify whether any fund has been left unspent • Ascertain the borrowing power of NGOs

  13. AUDIT OF ASSETS AUDIT OF ASSETS FIXED ASSETS INVESTMENT CURRENT ASSETS

  14. AUDIT OF FIXED ASSETS • Vouch all acquisitions/ sale of assets • Check calculation for depreciation • Verify accountability of assets received as contributions • Check donor’s letters/agreements for the grant • Conduct physical verification of the fixed assets

  15. Audit of investments • Verify the investment register • conduct physical inspection of investments • Ensure that investments are in the name of the NGO • Verify whether accrued income on investment have duly accounted for • Verify fresh investments and dis-investments by approval of appropriate authority and • Check bank accounts for the principal amount and interest.

  16. Audit of current assets • Physically verify the cash in hand and imprest balances • At the closing of the year see whether it tallies with books of account • Check the bank reconciliation statements • Ascertain details for old outstanding and unadjusted amounts. • Verify stock in hand • obtain certificates from the management for the quantities and valuation of cash

  17. Analytical procedure • Carry out the substantive or compliance audit procedure for analytical review • Compare the information of the prior periods • Conduct the variance analysis • In any inconsistency , investigate the difference by adopting the further audit procedure • Look for the anticipated result of the entity like budget forecast, expectation of the auditor

  18. Forming an opinion • The auditor shall form an opinion on the financial statements on the basis whether: • Sufficient & appropriate audit evidence has been obtained • Uncorrected mis-statements are material • Statements are prepared with requirement of the applicable financial reporting framework • Accounting estimates by the management are reasonable • Financial statement discloses significant accounting policies selected & applied

  19. conclusion • Auditor has to outline audit programme so as to check • Constitution of the trust • Income of the trust • Expenditure of the trust • Audit of assets • Audit of liabilities • More information in this regard on Accountable 89

  20. Further Reading • AccountAble 141: Charitable Purpose and Income Tax

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