Audit & Financial Statements

• Statutory Audit under Income Tax Act: Required for 12A exemption maintenance — results in Form 10B audit report
• Statutory Audit under Companies Act (Section 8): Annual statutory audit by a Chartered Accountant — results in CARO report
• FCRA Audit: Separate audit of FCRA designated account — required for annual FC-4 return filing
• Society Audit: Audit required by Registrar of Societies under state-specific legislation
• Donor Audit / Project Audit: Specific audit required by institutional donors for utilisation certification
• Internal Audit: Recommended for NGOs receiving CSR funds or government grants

• Balance Sheet as at 31st March
• Income and Expenditure Account for the year
• Receipts and Payments Account for the year
• Notes to Accounts and significant accounting policies
• Form 10B — Audit Report for 12A compliance (CA certificate)
• FCRA Account Audit Report (separate from general audit)
• Statement of Utilisation for grant-specific donor reporting

• Total income exceeds Rs.2.5 lakhs — mandatory audit under Income Tax Act
• Section 8 Company — mandatory statutory audit regardless of income level
• Society receiving government grants — mandatory audit as per grant conditions
• FCRA-registered organisation — mandatory annual FCRA account audit
• Receiving CSR funds — audit required as per corporate donor's internal policies

The statutory auditor of an NGO is not just a compliance requirement — they are a critical governance safeguard. Unlike commercial companies where the auditor's primary accountability is to shareholders, an NGO's auditor provides independent assurance to donors, government authorities, and beneficiary communities that funds have been properly received and utilised. Choosing the right auditor significantly affects the quality of the Form 10B audit report, the credibility of FCRA FC-4 filings, and the rigour of governance oversight.

Key Criteria for Selecting an NGO Auditor:

• Sector experience: CA firms with experience auditing NGOs understand the specific requirements of ITR-7, Form 10B, FCRA reporting, and Section 11 exemption computation — these are significantly different from commercial audit requirements
• Form 10B competency: Form 10B has over 40 specific disclosure requirements — an auditor unfamiliar with NGO regulations will miss critical reporting elements
• FCRA fund utilisation verification: FCRA funds require separate accounting with specific vouching requirements — only auditors experienced in FCRA audits can conduct this properly
• Independence: The auditor cannot be a trustee, director, relative of a governing body member, or someone with a financial interest in the organisation
• Empanelment: For government-funded NGOs, the auditor may need to be on the C&AG empanelled list
• Availability: The auditor must be available during October (ITR-7 deadline) and December (FC-4 deadline) — high-demand months when many NGOs require simultaneous audit completion

MFiling maintains a panel of CA firms with specific NGO audit experience across all major Indian cities — available to NGO clients who need empanelled auditors.