## NGO Audit: Corpus Contribution vs. Revolving Fund
NGOs receive funds in different forms. Understanding the nature and restrictions of each type of contribution is essential for correct accounting and audit.
### Corpus Contribution
| Feature | Detail |
|---|---|
| Nature | Contribution to the capital/corpus of the NGO |
| Purpose | Forms the permanent fund base of the organisation |
| Donor requirement | Donor must specifically designate the amount as corpus |
| Reference | Usually linked to total funds required by the NGO |
| Treatment | Shown on the Liabilities side of the Balance Sheet (not in I&E) |
> Audit focus: Verify written documentation from donors clearly designating the amount as corpus contribution.
### Revolving Fund
| Feature | Detail |
|---|---|
| Nature | Fund meant to rotate — lend, recover, lend again |
| Mechanism | NGO gives temporary loans → beneficiaries repay → loans given again |
| Beneficiaries | Other NGOs or project beneficiaries |
| Interest earned | May be added back to fund or credited to I&E Account — depends on donor's conditions or NGO's own rules |
> Audit focus: Trace the cycle — disbursements, repayments, and re-disbursements. Check whether interest income is treated consistently with the governing rules/donor conditions.
### Key Distinction
- Corpus = permanent capital; cannot be spent on operations.
- Revolving Fund = working capital for lending cycles; not permanently locked but must be rotated for its stated purpose.