A Non-governmental organization (NGO) refers to the organization which is established by a group of people to render their services not with the intentions of profit but with the sole purpose to help the society. The NGO is described as a non-profit making organization in which funds are raised from members, donors or contributors besides from receiving donations for their time or their energy and skills for accomplishing the social objectives such as imparting education, providing economic assistance to needy, providing medical facilities, managing disasters and other emergent situations.
NGOs are basically formed to serve the nation and its people. The main source of income or receipts of NGOs is donations or the subsidy, the grants from governments and the other donors who are willing to contribute to society. The NGO's shall maintain the books of accounts pertaining to the incoming and outgoing of the funds. Thereafter, the NGO for their own interest can get the books audited by an independent external auditor to assure the donor that he/she can rely on the reports. The NGO's are also required to file necessary IT returns as it is a legal entity in the eyes of law. As per the CBI report of 2015, there are more than 31 Lakhs NGOs in the nation.
Forms of NGO
NGOs can choose any option to select the form of their constitution. The different types of form of NGOs are:
Audit Procedure for NGO
Non-profit organizations (NGO) are the social establishments who operate to carry out the social activities with the help of public donations and therefore it is very important for them to prepare the financial accounts and statements so that they can showcase the authenticity of their performance & efforts to the general public. When these accounts and statements are audited by an independent Chartered Accountant, it sums up the validity of the same in the eyes of the general public. The procedure for auditing is very simple.
Different steps an Auditor takes to conduct the Audit
Types of financial audit for NGO
There are four types of financial audit carried out for NGO to independently examine the activities of NGO and to verify that the NGO is working in adherence to law and order. The types of audits are as follows:
Different Purposes of Different Audits
Benefits of Audit for NGO
Plenty of benefits are consequences when an NGO is audited. The two main advantages of Audit for NGO are as follows:
The concept of Matching forms the backbone of ITC (Input Tax Credit) under the GST regime.
Content Composite supply What is composite supply? What is meant by Principal supply? Analysis of provisions