Sense India- ICEVI

NATIONAL CONFERENCE
“Two Decades of Inclusive Practices”

Financial Due Diligence of NGOs

CA Richard Mascarenhas – Head Finance

richard@senseintindia.org

SENSE INTERNATIONAL INDIA

 Partner
ships

Capacity
Growth
Building

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 Individual Corporate
partnerships partnerships
Partner
ships
Organizational Government
partnerships partnerships

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 Organisational
Partnerships

Financial Non-Financial

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 Financial
Partnerships

Pre-partnership Periodic monitoring

Due-Diligence of existing projects

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 Checks & Balances

Financial Partnerships

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Checks and Balances
• Legal compliance (Income Tax, FCRA, Bombay
Public Trusts Act, Provident Fund, Professional Tax,
etc)
• Accounting standards (vouching, disclosures,
registers, etc)
• Donor reporting guidelines (Separate cost centre,
bank account, interest, Budget-variance analysis,
addendum to contracts, etc)
• Management Information System (Organisational
Plan & Budget, Governance reports, etc)

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LEGAL COMPLIANCE
• Non compliance risk = ADVERSE LEGAL LIABILITY
• Registrations, renewals, legal payments(taxes,
TDS, contributions), returns, scrutiny, other
submissions
• 12A, 80G, FCRA, Bye-laws, Trust deed, PF, ESI,
Professional Tax, GST, Lokpal, etc

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ACCOUNTING STANDARDS
• Non compliance risk = DISTORTED FINANCIAL PICTURE
• Supporting documents
– Complete particulars, relevance, adequately
authorised, third party confirmations
• Accounting entries
– Cash, Bank, Journals, Purchase, Sale, Fixed Assets,
Registers,

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DONOR GUIDELINES
• Non compliance risk = ADVERSE REPUTATION & IMPACT
ON CONTRACT RENEWALS/ PARTNERSHIP
• Chart of accounts to match with budget lines
• Cost Centre Accounting in case of multi-donor projects
• Financial payments should be backed by narrative of
events
• Financial outlay should correspond to project impact
• Budget-variances should be justified
• Any modifications to contracts should be clearly verified
• Special T&C of donors (visibility, quotations, etc)

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MANAGEMENT INFORMATION
SYSTEM
• Non compliance risk = ORGANISATIONAL
SUSTAINABILITY
• Organisational Vision, Mission, Key Objectives
• Strategic Plan, Annual Operational Plan
• Annual Budget
• Monthly/Quarterly reporting against budget
• Variance analysis
• Executive Board minutes, action report

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FINANCIAL DUE DILIGENCE
• Gap areas may be identified
• Intention to improve
• Capacity building of partner organisations
• Follow-up plans
• Periodic monitoring (onsite & offsite)

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 Partner
ships

Capacity
Growth
Building

SENSE INTERNATIONAL INDIA

Thank you

CA Richard Mascarenhas
Head – Finance
Email – richard@senseintindia.org

SENSE INTERNATIONAL INDIA