Context:
The Union Home Ministry’s new notification requires chartered accountants to certify if NGOs have violated the Foreign Contribution (Regulation) Act (FCRA) when filing audit returns.
Relevance: GS Paper 2 (Governance)
Highlights
New Requirements for Chartered Accountants (CAs)
- CAs filing audit returns on behalf of NGOs must specify if the NGO has violated provisions of the Foreign Contribution (Regulation) Act (FCRA), 2010.
- They must also provide the NGO’s name, email address, and registration number in the audit certificate.
Audit Certificate Details
- Auditors must verify if the NGO has used foreign contributions for the intended purposes and mention if any violations of FCRA or related rules have occurred.
- The certificate must include a statement certifying whether the NGO has violated any provisions of the FCRA, or specify that there have been no violations.
Impact on NGOs
- The new requirement increases accountability but also presents challenges for NGOs, particularly those critical of the government.
- Voluntary groups express concerns that the notification may make it harder for such NGOs to find willing auditors.
Background Context
- This move follows earlier guidance in 2021, where the Ministry emphasized ensuring that foreign funds are received and used legally by NGOs.
- The changes amend the Foreign Contribution (Regulation) Rules, 2011, aimed at strengthening the regulation of foreign donations to NGOs.
Conclusion
The Ministry’s notification increases scrutiny of NGOs’ use of foreign contributions, adding new compliance obligations for auditors. However, it has sparked concerns about potential challenges for NGOs critical of the government in securing auditors for their returns.
