An audit of a charitable institution examines the financial statements and, where required by the Income-tax Act or by a grant agreement, reports on application of income and on specified particulars. The auditor looks at completeness of donations, adherence to restrictions, and whether the statements distinguish corpus, restricted balances, and unrestricted funds.
Testing includes donation receipts against bank credits, grant utilisation against the sanctioned budget, cash collections against receipt books, and expenses against supporting bills and the objects clause. Related-party payments and investments are reviewed against the deed and against the conditions of 12AB registration.
The report follows the format required by the appointing trustees and, where a tax-specific audit report is applicable for the year, the notified form. Management-letter points cover receipt controls, delayed banking of cash, and incomplete beneficiary records.
The audited statements then feed the annual filings, trustee report, and any donor certificate that refers to the year’s accounts.