Learning Materials For Accounting, Management , Finance And Economics.

Friday, February 24, 2012

Audit Of Charitable Institution

Institutions which are established to perform social works or to help the disabled are known as charitable institution like Scout, Red Cross etc. Such institutions must make audit of books of accounts every years. An auditor should perform following works while conducting the audit of charitable institutions.

1. The auditor should study the constitution, legal status, rules and regulations of the charitable institutions.

2. Auditor should go through the minutes book of the governing body to see the decisions affecting accounts.

3. Auditor should vouch all the receipts in respect to donations, subscriptions, etc., with the subscription and donation.

4. Auditor should verify that a fund is received for a particular purpose and see that it has been utilised for such purpose only.

5. In respect to legacies, auditor should verify the receipts with Legacy Register.

6. Any amount invested should be as per the rules of the institution.

7. The income from investment is properly accounted in the books.

8. Auditor should see that no income tax is deducted from the incomes of the client. The incomes of charitable institutions are usually exempt from tax.

9. Auditor should verify the assets and liabilities on the date of balance sheet.

10. It should be seen that proper distinction is made between capital and revenue expenditure.

11. The cash in hand and cash at bank should be verified.