ICAI Advisory on Certification of CSR Funds Utilisation

ICAI issues Advisory for Members/ Companies to obtain an Independent Practitioner’s Report on Utilisation of CSR Funds, from the auditor/ CA in practice of the third party/ NGO through which such activity has been undertaken, for compliance with CSR Provisions.

Such Auditor/ CA in practice has to verify that the funds have been spent on CSR activities as per the Companies Act/ Rules and in accordance with the ICAI’s Guidance Note on Reports/ Certificates for Special Purposes. Also ICAI has provided Draft format of Independent Practitioner’s Report on Utilization of CSR Funds.

ICAI Advisory dt. 29 May 2020

Advisory for Members of the Institute of Chartered Accountants of India (ICAI) and Companies to whom CSR provisions under Companies Act, 2013 apply

Wherever a Company is required to comply with CSR Regulations under section 135 of the Companies Act, 2013, it may undertake the CSR activity, either:

i) By the Company itself; or

ii) Through a Third Party being a Trust/ Society or Section 8 Company/ NGO.

Wherever the company undertakes the CSR activity through a third party/ NGO, it is advised that all such companies should obtain an Independent Practitioner’s Report on Utilisation of such CSR Funds from the auditor/ CA in practice of the third party/ NGO, to whom the funds are given by the Company for implementing CSR activity.

In such cases the auditor/ CA in practice of the third party/ NGO is advised that they should submit the Independent Practitioner’s Report on Utilization of CSR Funds after verifying that the third party has spent the funds on CSR activities as per Section 135 of the Companies Act, 2013, read with Schedule VII to the Act and related regulations in accordance with the Guidance Note on Reports or Certificates for Special Purposes issued by the Institute of Chartered Accountants of India.

The draft format of Independent Practitioner’s Report on Utilization of CSR Funds is attached.

Encl: Draft format of Independent Practitioner’s Report on Utilization of CSR Funds.

Note: The format of the Utilization Report is being issued after being duly vetted by the Auditing and Assurance Standards Board of ICAI.

Independent Practitioner’s Report on Utilization of Funds by (Name of the third party/ NGO) for purposes of discharging the Corporate Social Responsibility requirements of (Name of the Company)
(please refer above attachment)