New Delhi: The Union Home Ministry on Wednesday notified that chartered accountants filing audit returns on behalf of NGOs need to specify if the association violated provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA) or not.
The Act requires a CA to certify if an association or NGO has utilised foreign contribution received for the purposes it was registered for and the annual statements are to be uploaded on the FCRA portal.
In a December 31, 2024 notification, the Union Home Ministry said that CAs will have to mention the name, email address, registration number of the auditor while issuing the audit certificate and specify if the NGO has “violated the provisions of FCRA-2010 or rules made thereunder or notifications issued thereunder,” with the details of the violations.
The auditors will also have to specify if the NGO has not made any violation.
“I have examined all relevant books and records, including the items mentioned in column 8 of FC-4, and to the best of my knowledge and belief (name of the person/ association) has not violated any provisions of the FCRA, thereunder or notifications issued thereunder,” the amended Rules stated. The notification amends the Foreign Contribution (Regulation) Rules, 2011.
A member of a voluntary group said the Home Ministry notification will make it more difficult for NGOs who are critical of the government to find auditors to file returns on their behalf. “Even if you find an FCRA donor, CAs will be scared to prepare certificates on the behalf of NGOs who are perceived to be not in the good books of the government,” said the member.
Earlier in 2021, the Ministry advised chartered accountants to ensure that foreign funds are received and utilised by NGOs “within the four corners of law”.
The notification further allows NGOs the option to carry forward the unspent part of allowable administrative expenses in a financial year to the immediately succeeding financial year. FCRA allows only 20% of foreign funds to be spent on administrative expenses in a designated bank account with the State Bank of India (SBI).
Since 2015, the FCRA registration of more than 16,000 NGOs have been cancelled on account of “violation”. Registration under FCRA is mandatory to receive foreign donations or funds.