As we all know, FCRA rule 17 requires that every FCRA registered NPO must submit Financial Statements of Balance Sheet, Income & Expenditure and Receipt & Payment alongwith the Annual return (FC4). Generally most NPOs submit FCRA financial statements, however some have been submitting consolidated financial statements. Now FCRA authorities have started demanding FCRA financial statements only. While Rule 17 does not specifically state that an NPO should submit FCRA financial statements, however considering the practice by FCRA authorities you are all requested to ensure that FCRA financial statements are prepared and audited and submitted along with FC4.
It is further pointed out that sometimes NPOs do not even maintain separate books of accounts for FCRA receipts & utilisations. This is certainly a violation of Section 19 of the Act, which requires that a FCRA registered person must maintain accounts of any FC received & utilised during the year. This will also be required by your chartered accountant while issuing FC certificate to you, as the CA is required to certify that the NPO is complying both with Section 19 of the Act and Rule 17 of the FCRA Rules. It may be noted that violation for non-maintenance of accounts could attract a penalty of Rs 1 lakh or 5% of FC rec’d, whichever is higher.
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Socio Research & Reform Foundation (NPO)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008.
We havealready filed the FC4 for FY 2021-22. Though Audited Accounts statements of Receipts & Payments and Income & Expenditure statements were filed along with Balance Sheet and Auditor’s Certificate, we did not submit separate financial statement for FCRA and the corresponding Auditor’s Certificate. Are we now required to do these now for financial year 2021-22 and if so how do we do it since the filed statements were uploaded. Have we to file the modified FC4 as per the latest orders? Please enlighten us.
Thanks & regards,
You have a point that Rule 17 (1) does not specifically state if the accounts to be filed should be that of consolidated or just FCRA. However if you read the Rule 1, it starts with the words ‘Every person who receives FC under the Act, shall submit a signed or digitally signed report in electronic Form in Form FC-4 with scanned copies of income and expenditure statement, receipt and payment account and Balance Sheet for every financial year beginning on the 1st day of April, within 9 moths of the closure of the financial year.
Thus while the rule does not specify that it has to be FCRA receipts & payments, however considering the rule starts with the words ‘Every person who receives FC under the Act…’, hence generally most organisations have been filing only FC financial statements. One could argue that Rule does not state so. However it is observed that recent spate of FCRA audits undertaken under the aegis of FCRA Dept, the auditors ask for ‘audited FCRA financial statements’. Hence it is always advisable to file FCRA financial statements alongwith FC4.
What you can do now, I am afraid very little on FCRA website, since once a return is filed there is no scope for revising the same. Just get these statements prepared and audited and have them available, in case you are subjected to FCRA Dept appointed audit.
Hope the clarification helps.