Presentation on Dondddddddddor Audit.pptx

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1. CONTENTS Background Source of fund and Applicable Guidelines Meaning of Donor Audit and Responsibility of Auditor Conducting Donor Audit Initiation Data Collection Data Analysis Reporting Documents required for Permanent File Major Observations Report Format

2. Background NPOs

3. Source of Fund and Applicable Guidelines Source of Fund Grants from Donors Own fund Applicable Guidelines Incorporation Agreement with Donor Guidelines provided by Donor Financial and Administrative Bylaws of specific NGO. Companies Act, Social Welfare Act, Income Tax Act, Labor Act, Social Security Act.

4. Meaning of Donor Audit A donor audit is an examination of a non-profit organization's finances, operations and activities to ensure that the donations it receives from donors are being used properly and in accordance with the intended purposes as per cooperation agreement. The audit is conducted by an independent auditor or accounting firm to provide assurance to donors that their contributions are being managed transparently and effectively. The results of the audit can help the organization to identify areas for improvement and strengthen its relationships with donors.

5. Responsibility of Auditor Compliance with the cooperation agreement, Use of the project funds exclusively for purposes of the project and in accordance with the cooperation agreement, and Whether the financial statements show a true and fair view of (or present fairly in all material respects) the income and expenditure and the financial position of the project.

6. Conduction Donor Audit Initiation Understanding the entity and its working environment. Discussion with management, Gather knowledge about the objective of the entity, Develop audit objective and criteria. Identification of key tasks and activities involved, such as setting objectives, defining scope, and identifying resources.

7. Data Collection Identification of key tasks and activities involved, such as reviewing financial records, conducting interviews, and analyzing donor data. Relevant data/Documents are collected: Narrative and Financial Reports, System access(Backups), Vouchers( Journal, Payment, Receipt ) Fixed Assets Register and Inventory consumption sheet, Salary Sheet and other related documents, TDS and ETDS Vouchers, Procurement related documents, Others

8. Data Analysis The Income and Expenditure from the Financial report are verified with the system data along with the vouchers and the activity wise supporting provided. Income : (Refer: Checklist) Fund received from Donor Own Means contribution Interest earned Miscellaneous Income.

9. Continued…. Expenditure : (Refer: Checklist) Project Activities, HR Expenses, Administration Expense, Common Cost of Organization and Exchange gain & loss. Balance : (Refer: Checklist) Bank Balance Cash and Cash Equivalent Accounts Payable Accounts Receivable TDS Payable Advance Receivable/Payable

10. Continued…. Analysis based vouching is to be carried out in order to verify the genuineness of the expenses incurred. Mis-utilization of the fund is to be traced. Auditing in these areas is not only about verifying what is there but also looking for what is not there. For e.g. Double funding, concealed grant income, Undisclosed related party transactions, assets that do not exist, activities that have not been undertaken and so on cannot be verified only with vouchers. Narrative report provides the summary of all the activities performed during the period. Match and Check if the Narrative report, Financial report and Physical inception provides same view or not.

11. Reporting Discussion of findings with management, Preparation of Management Letter, Response from management, Finalization of Management Letter, Reporting to Donor.(Management Letter, Cover Management Letter, Audit Report, Financial & Narrative Report and Checklist ).

12. Documents for Permanent File The Project Holder’s Constitution and Legal Registration The Final Project Proposal (and any agreed amendments) The Cooperation Agreement The Final Project Budget (and any agreed amendments) The Audit Agreement Past Audited Financial Reports if applicable Past Narrative Reports if applicable Past Management Letters if applicable

13. Major Observations Non-compliance of Income Tax Act, 2058 Non-compliance of Labor Act, 2074 Non-compliance of Social Security Act, 2074 Non-Preparation of procurement related documents No Evidence of activity(No meeting minutes, Attendance sheet, etc.)