30th April 2014
Dear Friends,
It has become a recent practice among Voluntary Organisations and Funding Agencies to enter into some sort of tripartite agreement with auditors designated by Funding Agencies to get the audited accounts of the project funded by respective Funding Agency again audited by the designated auditor.
1. Is it a healthy and ethical practice?
2. Why this need has arisen? Can we in the Voluntary Sector Introspect and Respond?
3. Our experience is that at some point these designated auditors emotionally blackmail Us for few small and even big mistakes or adjustments we made in the interest of the organisation and take a bribe. It is another BIG question if these are made for fraudulent interest of our CEOs or there accountants? How do we resolve the issue?
These are sensitive, critical but crucial questions we need to respond that I am sharing with you experiencing these entire traumas over 45 years.
Regards,
V.B.Chandrasekaran,
Chatti Mahatma Gandhi Aashramam,
Chatti Post, Chinthur Mandal, Khammam District,
Andhra Pradesh, Pin Code: 507129.
Email: verivaan2049@yahoo.com antarbharatid2010@gmail.com;
“As I said earlier let us focus on how we can enhance accountability in the
Sector, to enhance the Credibility of the Sector as a whole.” WE SHOULD and this is the crucial response that is expected. Let us try a dialogue and not debate.
If we respond proactively for the suggestion of yours quoted by me above DONORS will not impose an Audit over Audit. Let us not beat around the bush. The audit over audit is not correct, infringes upon VOs Independence but, we have invited by our dereliction such downgrading of our sector!!!
V.B.Chandrasekaran
Mr Chandrasekranji,
Your request for discussing the issue of auditing already audited accounts, whether it is a correct practice or not. I think we need to put certain issues in correct perspectives. ‘Audit’ would be different for different persons, depending upon the ToR. For example an environment audit is different from financial audit, requiring different expertise and skills. A financial audit itself can be different depending upon the ToR requirement. An audit for financial statements to be presented in the General Body would be different compared to an audit required by bankers where the focus would be projections of future income. Similarly a donor may not be interested in other aspects of financial statements, but may want to know if the grant provided by it, has been used for the purposes intended, while a statutory auditor would basically focus on legal compliance and accuracy of figures rather than how funds have been used.
Further let us accept independence and skill set of the auditor itself would be a critical factor for a donor. We all know most auditors appointed by the NGOs have associated with the for long and their focus is more on legal compliance rather than assuring accountability to different stakeholders. In fact the new Companies Act 2013 has given legal teeth to enhance auditor’s independence by legally providing that auditors cannot continue forever and need to be rotated.
In view of the above, appointment of an auditor by donors is to be seen in the correct context. In any case most donors include appointment of auditor by donors in the grant agreement signed between the donor and donee before giving the grant.
As I said earlier let us focus on how we can enhance accountability in the
Sector, to enhance the Credibility of the Sector as a whole.
warm rgds
subhash
Friends,
This forum has been created for discussing issues impacting the social development sector, one way or other, and while SRRF promotes frank & free discussions among participants, we must not use this forum to castigate negative aspersions on entire profession due to bad experience with one or two individuals. An auditor is doing a duty of providing assurance over somebody else’s financial statements. It is not an easy task and we must respect him/her for that. However if there are any specific adverse experiences, then the concerned parties (auditee, auditor & funding agency) need to sit down and resolve them.
For better or worse, institution of audit cannot be wished away, presently this is the only framework which is recognised as providing accountability assurance. There is scope to enhance accountability in the sector and there is a need to discuss how that can be achieved, perhaps popularising ‘Social Audits’ could be one way. Perhaps some can initiate a discussion on Social Audits, and why it is still not so popular.
warm rgds
My question is misunderstood and got diverted. IT is in no way talking of the auditors but one of the practices that has crept in Voluntary Sector- now called NGO.
1. Auditors are not responsible. We and funding agencies are and I am addressing a question if it is ethical. We did not get answer to this main question. I just want and we need only from view point of ethics that are governing audit that they can say.
2. Ethical or even if not ethical, why we are meekly accepting and I see mistakes in our sector is responsible for the stipulation from Funding agencies. What are the mistakes?
3. Subhash Mittal Ji has raised a pertinent question “Perhaps some can initiate a discussion on Social Audits, and why it is still not so popular.?”
4. Can I suggest, a topic is started on this perspective from the viewpoint and ethics of Voluntary Organisations.
V.B.Chandrasekaran
Chatti Mahatma Gandhi Aashramam
Chatti Post, Chinthur Mandal
Khammam District, Andhra Pradesh
Pin Code: 507129
Email: verivaan2049@yahoo.com antarbharatid2010@gmail.com
Mobile: +919490109328 +918297976970
Dear Friends,
Corruption can be dealt with as per laws of the land.
Statutory Audit(FC,LC and consolidated) covers all the programmes and projects of any NGO. If the donor of a specific project insists on separate Audit / separate Project Account with a Bank / separate project books of Accounts, nothing can be done about it. It depends on the magnitude of the project.
Time effective systems can be designed to suit high budget programmes / projects.
Udayashankar
Dear Sir
Your concern is right. This is probably in the ambit of the Institute of Chartered Accountants. Is it?
In as much as we have our audited accounts and we give the report to the donor in the specified format and with the needed details,
I think funding agencies may peruse them and raise questions for clarifications instead of asking us to accept their auditor.
Regards
Bhooma
Friends,
I have strong reservations on the comments made on the blackmailing by auditors or more so strong objections on writer’s comments on bribing. It may be one off case that somebody has faced with, which not at all is reflective of the strengths of audit profession per se. An auditor is suppose to be righteous, diligent and a propagator of equity. Miniscule flouting of rules of administrative nature, by the NGOs do not call for adverse opinion by the auditors.
My 35 years of professional practice as auditor on behalf of funding agencies as well as that of the NGOs/ CBOs on the other side, has given deep me insights of functioning of both. While funding agencies wish to ensure that the funds provided do meet the agreed terms of usage with value add on focused area and ensuring transparent reporting by NGOs, the other sided NGOs work on their compulsions, agendas and ethos. Both set of auditors have different role to play; and each one’s role is as important as the other’s. NGOs should not be wary of the checks and balances warranted as they are entrusted funds that are in turn are entrusted to the funding agencies by other funders and donors.
Each ones’ act and obligations must be taken in its stride by all the stakeholders.
Warm regards,
CA Avineesh Matta
Friends,
In my view the issue of taking bribe should not be debated in this group as it is an unlawful activity.
Shekar
Bangalore
Dear Friends
We never faced this unethical behaviour of any of our funding partners. If any of funding partners conducts audits of the grant money provided by them as per the set norms in MoU or regulatory financial norms, we allow them to do so. This further strengthen the financial mechanism of the organization with transparency.
If we face unethical behavoiur of any of the officials of partners, we immediately withdraw partnership.
Thanks for raising this sensitive issue which must be understood in the framework of our organization and regulatory mechanism.
Dr. O.P. Kulhari
Secretary
CULP (Centre for Unfolding Learning Potentials)
602 (O), Vishwamitra Marg,
Hanuman Nagar Extn. Sirsi Road,
Khatipura, Jaipur
Audit over audit. Is it ethical and correct?
Very Interesting. It is neither ethical nor correct but it is simply bullying some voluntary organisations who are functioning smoothly minding their own business of doing good things. This recent trend is nothing but an invention of Management Graduates and CAs with Corporate attitudes who are no good to work in any place and does not know the ABCD of social work, human rights, mobilise or organise people for their rights!!! This money making machinery has convinced the funding agency that this new policing method will help to prevent pilferage of funds. This money making machinery is looting the funders which they do not realise.
Commonly we need to discover some anti virus mode to prevent this assault.