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Fund utilization audit in the CSR department or Foundations refer to the confirmation that utilization of funds contributed to a project is as per the agreed commitments. These financial audits are focused on ensuring that the csr funds have been utilized to cater to the agreed number of beneficiaries in a transparent and legal manner.
It is important to have a long term CSR vision and strategy, focused on community development and change. We help organizations to align their CSR strategy to their organization's vision.
While sporadic efforts can bring change, but in order to uplift a community, a sustainable and planned approach is required. We have team of experts who help the organizations to create partnerships aligned to the bigger vision for short, medium and long term.
A change in community happens through planned and sustainable efforts. The evolving concept of CSR focuses on organizations to plan for interventions impacting communities positively and sustainably. The interventions could be long term in nature with small and medium term milestones.
Fund utilization audit approach begins by understanding the project performance indicators, budget submitted at the beginning of the project and budget utilization documents shared with the CSR department or Foundation. We review the co-funding commitments in the existing projects which is then followed by the checklist based review and discussion with stakeholders on the financial management system for the project. We share our findings with the implementing partner of the project for initial feedback and discuss the same with the CSR department or Foundation along with the recommendations.
No, a CSR fund should be used for broader community welfare projects with long-term community impact. Under Section 135 of the Companies Act, 2013, CSR projects or activities that exclusively benefit the employee of the company and their families shall not be considered a CSR activity.
As listed under Schedule VII of the Companies Act, 2013, CSR funds can be used for activities involving education, healthcare, environmental sustainability, poverty alleviation, women empowerment, rural development, and other initiatives.
To ensure funds are effectively utilized, companies should conduct baseline studies, implement structured CSR programs, partner with credible NGOs, monitor fund disbursement, and carry out impact assessments.
CSR Funds can be donated to NGOs, but only to those registered under Section 80G or 12A of the Income Tax Act and registered with the Ministry of Corporate Affairs under Form CSR-1 for compliance.
SoulAce provides end-to-end CSR solutions to companies for CSR fund utilization. It includes fund planning, monitoring, audits project execution, impact assessment, compliance management, and transparent reporting to ensure CSR funds drive meaningful and sustainable change.
If CSR funds remain unspent, they must be transferred to a government-specified fund (like PM National Relief Fund) within six months after the financial year-end, unless committed to an ongoing project.
CSR funds should be utilized within the financial year. If allocated to an ongoing project, they must be transferred to a separate CSR account and can be carried forward for up to three financial years.
Companies can spend CSR funds on projects directly, collaborate with NGOs, or contribute to government-approved funds focused on social, environmental, and economic development. The project should be aligned with Schedule VII of the Companies Act, 2013.
According to section 135 of the Companies Act, companies with a net worth of ₹500 crore, turnover of ₹1,000 crore, or net profit of ₹5 crore must spend at least 2% of their average net profits (from the last three years) on CSR activities.
Under Section 37(1) of the Income Tax Act, 1961, CSR expenditure is not considered a business expense or tax-deductible. However, donations made to specific funds under Section 80G may qualify for tax benefits.
The company works together with SoulAce to chart the best course of action to improve the CSR initiatives.
Imagine you have conducted a baseline study and allocated a budget for your organization’s CSR practices. What comes next? Ensuring your CSR funds reach the cause and are utilized to their best capacity may seem like a daunting task. This article will present you with some tips to make sure you move forward in the right direction.