The Ministry of Home Affairs (MHA) has asked chartered accountants (CAs) to ensure that foreign funds are received and utilised by NGOs (non-governmental organisations) “within the four corners of law.”
Since FCRA (Foreign Contribution [Regulation] Act) dealt with national security, associations were required to exercise extreme care and caution in utilising foreign contribution, it said.
The FCRA, 2010, states that a CA should certify if an association or an NGO has utilised foreign contribution received for the purposes it was registered for and the annual statements are to be uploaded on the FCRA portal.
Registered NGOs can receive foreign contribution for five purposes -- social, educational, religious, economic and cultural. An FCRA registration is mandatory for NGOs to receive foreign funds.
Charter for banks
As reported by The Hindu on January 29, the MHA has laid down a charter for banks, which said that “donations received in Indian rupees” by NGOs and associations from “any foreign source even if that source is located in India at the time of such donation” shall be treated as “foreign contribution.”
Now, the MHA has laid down a similar charter for the CAs.
The Ministry said, “Chartered Accountants (CAs) examine and audit all relevant books of accounts and Bills and vouchers of FCRA associations and then present audited accounts which are submitted/uploaded online to the Government. Therefore, they are obliged to conduct performance as well as forensic audits to ensure that receipt and utilisation of foreign contribution has happened within the four corners of law. Hence they are expected to provide proper guidance to the associations in maintaining proper accounts and utilising foreign contribution only as provided under the FCRA law.”
The MHA has asked the CAs to get themselves thoroughly familiarised with FCRA Rules, 2011 and amendments and notifications issued from time to time so that they can help and guide the associations and their office-bearers.
The Ministry also provided a list of areas where the CAs could help or guide the NGOs :
To verify whether the associations are eligible to receive foreign contribution, to ensure that an association receives and utilises the foreign contribution (FC) through its bank account exclusively opened for the purpose, to assist in the proper preparation and maintenance of prescribed books of accounts and to ensure that the annual returns of the association/NGO have been prepared and uploaded in accordance with the provisions of the FCRA.
As per existing rules, all banks have to report to the Central government within 48 hours the “receipt or utilisation of any foreign contribution” by any NGO, association or person whether or not they are registered or granted prior permission under the FCRA.
Case against Sikhs for Justice
Recently the National Investigation Agency (NIA) registered a case against Sikhs for Justice (SFJ), a foreign-based group that advocates secessionist and pro-Khalistani activities in India. It summoned 40 people, all associated with the ongoing farmers agitation, to join the probe in the case, where it alleged that large amounts of funds being collected by Khalistani terrorist outfits were being sent through NGOs to pro-Khalistani elements based in India.
In 2019, the MHA amended the FCRA rules, where it said that even persons prohibited to receive foreign funds such as journalists, politicians, members of the judiciary could “are allowed to accept foreign contribution from their relatives” if the amount did not exceed ₹1 lakh. Any transaction above the amount would have to be informed to the Ministry.
The Act, enacted in 1976, was amended in 2010, when a slew of new measures were taken by the Ministry to regulate foreign donations. It was again amended in September last. The latest amendment to the Act inserted a new provision that makes it mandatory for all NGOs to receive foreign funds in a designated bank account at State Bank of India’s New Delhi branch and the accounts have to be opened by March 31. Any other bank account can be linked to the main account but all foreign donations should be received in the SBI account.
The Act also made Aadhar a mandatory identification document for all the office-bearers, directors and other key functionaries of an NGO and capped the administrative expenses at 20% of the total foreign funds received. Earlier the upper limit was 50%.
