The Foreigner’s Division of the Union Ministry of Home Affairs (MHA) has issued new guidelines mandating that Chartered Accountants (CAs) filing audit returns for NGOs must disclose whether the organisation has violated provisions of the Foreign Contribution (Regulation) Act, 2010 (FCRA). The updated rules, announced on Sunday, are part of the government’s continued efforts to enforce compliance with the FCRA.
According to the new provisions, CAs must certify that the foreign contributions received by NGOs have been utilized in accordance with the purposes for which they were registered. Additionally, the annual financial statements must be uploaded on the FCRA portal for transparency.
The MHA’s notification, dated December 31, 2024, specifies that auditors must include details such as their name, email address, and registration number when issuing the audit certificate. Furthermore, they are required to clearly state whether the NGO has violated any provisions of the FCRA or related rules and notifications. If there are no violations, the auditor must affirm this in their statement.
The notification amends the Foreign Contribution (Regulation) Rules, 2011, and provides a template for the auditors to include a declaration such as: “I have examined all relevant books and records… and to the best of my knowledge, the organisation has not violated any provisions of the FCRA or its rules.”
While the new rules aim to tighten oversight, some members of NGOs have expressed concerns. They argue that the stricter requirements could make it harder for organisations, especially those critical of the government, to find auditors willing to file their returns.
In addition to these requirements, the new guidelines allow NGOs to carry forward any unspent administrative expenses to the following financial year. Under the FCRA, a maximum of 20 percent of foreign funds can be used for administrative expenses, which must be kept in a designated bank account with the State Bank of India (SBI).
Since 2015, over 16,000 NGOs have had their FCRA registrations cancelled due to alleged violations of the Act’s provisions. It is important to note that FCRA registration is mandatory for NGOs wishing to receive foreign donations or funds.
