# Audit of Non-Government Organisations (NGOs)

## Registration Requirements

There is no requirement of mandatory registration for NGOs in general
BUT if the NGO is created as a trust and the trust relates to immovable property worth more than Rs. 100, registration of the trust becomes mandatory

## Accounting Basis

Form	Accounting Basis
NGOs registered under Companies Act, 2013	Must maintain BOA on accrual basis
NGOs NOT registered under Companies Act, 2013	May maintain accounts on accrual OR cash basis

## Audit Planning Considerations

While planning the audit, the auditor may concentrate on:

Knowledge of the NGO's work - its mission and vision, areas of operations, and environment in which it operates
Updating knowledge of relevant statutes including recent amendments and circulars
Reviewing legal form of the organisation and its MOA & AOA
Reviewing the NGO's organisation chart and budgetary policies

Worked example

### Example 1

Example: An NGO is set up as a trust holding land worth Rs. 50 lakhs. The Rs. 100 immovable property threshold is clearly crossed - trust registration is mandatory. The auditor must verify the trust deed is properly registered.

### Example 2

Example: A Section 8 Company (under Companies Act, 2013) doing charitable work cannot prepare its accounts on cash basis - it must follow accrual basis since the Companies Act requirement is mandatory.

⚠️ Common exam mistakes

Saying ALL NGOs require mandatory registration - only trust-form NGOs with immovable property > Rs. 100 must register the trust
Allowing a Section 8 Company to use cash-basis accounting - Companies Act mandates accrual
Skipping review of MOA/AOA at the planning stage - these define the scope of permissible activities

Reference:

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