E-FRRO compliance for foreign nationals in India

Under Indian law, the legal rights and the restrictions imposed on foreign nationals depend on whether they are categorized as residents or non-residents.

Entry into India generally requires a valid visa granted by an Indian Mission (that is, consulate of the Indian embassy) abroad. Furthermore, foreign nationals who enter India must register themselves with the Foreign Regional Registration Office (FRRO) within 14 days of arrival if they intend to reside in India for a consecutive period of more than 180 days.

The entry, stay and exit of foreign nationals into India are primarily governed by the following laws (among others):

• Passport (Entry into India) Act 1920, read with the Passport (Entry into India) Rules 1950.
• Foreigners Act, 1946.
• The Registration of Foreigners Act 1939, read with the Registration of Foreigners Rules 1992.

What is e-FRRO?

• It is web-based application aimed to build centralized online platform for foreigners for visa related services. Its key objective is to provide Faceless, Cashlessand Paperless services to the foreigners with user friendly experience.
• Using this application, foreigners are required to create their own USER-ID by registering themselves. Afterwards, they would apply online through registered user-id for various Visa and Immigration related services in India viz. Registration, Visa Extension, Visa Conversion, Exit Permit etc, without any hassle and obtain the service(s) without coming to FRRO office.
• The necessary immigration/Visa document e.g. Registration Permit/Certificate (RP/RC), Visa Extension Certificate etc will be sent by post on the address mentioned. It would also be electronically sent to the foreigner to his registered email ID.
• Foreigners would not be required to mandatorily visit FRRO/FRO office for grant of service. However, in certain exceptional cases, the foreigner will be intimated to visit the FRRO/FRO on scheduled date and time for interview.
• In case of an exigency, the foreigner can visit the FRRO/FRO office directly for grant of service.

Foreigners’ Registration in India

• All foreigners (including foreigners of Indian origin) visiting India on long term (more than 180 days) Student Visa, Medical Visa, Research Visa and Employment Visa are required to get themselves registered with the Foreigners Regional Registration Officer (FRRO)/ Foreigners Registration Officer (FRO) concerned having jurisdiction over the place where the foreigner intends to stay, within 14 days of arrival (except Pakistan and Afghanistan).
• All Business Visa holders are required to register themselves with the FRRO/FRO concerned in case the aggregate stay in India on Business visa exceeds 180 days during a calendar year.

Foreigners other than those mentioned above will not be required to get themselves registered, even if they have entered India on a long term visa provided their continuous stay in India does not exceed 180 days. If the intention of the foreigner is to stay in India for more than 180 days, he/she should get himself/ herself registered well before the expiry of 180 days from the date of arrival with the FRRO/FRO concerned.

Children below 16 years of age are exempted from Registration if they have entered on PIO card or on any type of Visa and except where specified otherwise. It is mandatory for all foreigners to personally appear at the concerned FRRO office for obtaining any Visa related services.

Requirements for Extension of VisaForeigners must submit application for extension of residential permit/ visa at least 60 days before the date of expiry of respective residential permit/visa.

Over stayIn the event of overstay foreigner is liable for prosecution under Foreigners Act 1946 and imprisonment up to 5 years with fine & expulsion from India.

Late Renewal of Residential PermitA foreigner who has delayed for renewal of RP, on application, if delay is condoned will be charged a penalty in Indian currency equivalent to US $30/- for late renewal.

Report of absence from Registered AddressIf at any time a foreigner proposes to be absent from his / her registered address for a continuous period of eight weeks or more or change his / her registered address, then the foreigner is required to inform in person or through an authorized representative or by registered post to his / her Registration Officer of his / her intention to change his registered address or to leave either temporarily or permanently under the jurisdiction of the Registration Officer. In case of return, the foreigner should inform the Registration Officer of the date of return and in case the foreigner is moving away inform the change of address. Any changes made subsequently should also be intimated to the Registration Officer. Every foreigner, who stays for a period of more than eight weeks at any place in any district other than the district in which his / her registered address is situated, shall inform the Registration Officer of that district of his / her presence. This can be made in writing and the requirements deemed to have been fulfilled if, prior to arrival the foreigner furnishes to the Registration Officer of the said district intimating the dates of his proposed arrival and departure from the district.

Change in Registered addressA foreigner shall be deemed to have changed his registered address, if he changes his residence from one place to another place in India and if having no residence, he leaves his registered address knowing that he is not likely to return within six months of leaving it.

Reports of other changes except addressEvery foreigner is required to furnish to the Registration Officer of the district in which his registered address is situated, particulars of any circumstances affecting in any manner the accuracy of the particulars recorded in his certificate of registration within fourteen days after the circumstance has occurred, and generally shall provide to the Registration Officer all information as may be necessary for maintaining the accuracy of the certificate.

Surrender of certificates of registration on departureEvery foreigner who is about to depart finally from India shall surrender his certificate of registration either to the Registration Officer of the place where he is registered or of the place from where he intends to depart or to the Immigration Officer at the Port/Check post of exit at the time of final departure from India. If the certificate is surrendered other than to the Immigration Officer of the port or check post of exit, a receipt indicating such surrender of the document may be obtained and shown to the Immigration Officer at the time of final departure

Duplicate certificate of registrationIf any certificate of registration, issued under existing Acts / Rules is lost or destroyed, the foreigner to whom it was issued, shall make or send to the Registration Officer of the district of his registered address a report of circumstances in which it was so lost or destroyed along with an application in writing and a copy of police report in order to issue a duplicate copy of the certificate of registration.

Person of Indian Origin (PIO)

• As per the Gazette of India (Part-I, Section-I) published on 09.01.2015, all the existing Persons of Indian Origin (PIO) card holder registered as such under new PIO Card scheme 2002, shall be deemed to be Overseas Citizens of India Cardholder.
• All PIO card holders with valid PIO cards as on 09.01.2015 are advised to apply for conversion of their PIO card to OCI card.
• Bureau of Immigration would accept PIO card as valid document till March 31, 2019 along with valid foreign passport. Machine-readable electronic document is mandated by the International Civil Aviation Organization (ICAO) guidelines.

Overseas Citizen of India (OCI) Cardholder(a) The following categories of persons (except Pakistan and Bangladesh) are eligible to apply under OCI scheme:

• Who is a citizen of another country, but was a citizen of India at the time of, or at any time after, the commencement of the constitution; or
• Who is a citizen of another country, but was eligible to become a citizen of India at the time of the commencement of the constitution; or
• Who is a citizen of another country, but belonged to a territory that became part of India after the 15th day of August, 1947; or
• Who is a child or a grand-child or a great grandchild of such a citizen; or

(b) A person, who is minor child of a person mentioned in clause (a); or

© A person, who is a minor child, and whose both parents are citizens of India or one of the parents is a citizen of India; or

(d) Spouse of foreign origin of a citizen of India or spouse of foreign origin of an Overseas Citizen of India Cardholder registered under section 7A, Citizenship Act 1955 and whose marriage has been registered and subsisted for a continuous period of not less than two years immediately preceding the presentation of the application under this section.

Foreigners Possessing Entry (X) Visa / Journalist (J) Visa

• Foreigners visiting India on long term Entry(X) visa or J visa would not require registration with the concerned FRROs/FROs if the duration of his/her stay does not exceed 180 days on a single visit. In case a foreigner intends to stay for more than 180 days on a single visit he should get himself registered well before the expiry of 180 days.
• Foreigners visiting India are also required to adhere to the Special Endorsement made on the Visa by the Indian Mission.
• Every foreigner at the time of Registration, shall furnish, such information in registration report, as may be in his possession for the purpose of satisfying the Registration Officer and shall, on being required, shall sign the registration report in the presence of the said officer and shall thereupon be entitled to receive from the said officer a certificate of registration in Part III of Form A.

Indians visiting abroad
ECNR/ECRAs per the Emigration Act, 1983, Emigration Check Required (ECR) categories of Indian passport holders, require to obtain “Emigration Clearance” from the office of Protector of Emigrants (POE), Ministry of Overseas Indian Affairs for going to following 18 countries.

United Arab Emirates (UAE), The Kingdom of Saudi Arabia (KSA), Qatar, Oman, Kuwait, Bahrain, Malaysia, Libya, Jordan, Yemen, Sudan, Afghanistan, Indonesia, Syria, Lebanon, Thailand, Iraq (emigration banned).

However , the Ministry of Overseas Indian Affairs (Emigration Policy Division) have allowed ECR passport holders traveling abroad for purposes others than employment to leave the country on production of valid passport, valid visa and return ticket at the immigration counters at international airports in India w.e.f. 1st October 2007.

If the RPO has issued Indian passport either with endorsement of “Emigration Check Required” or no endorsement of “Emigration Check Required” in the passport, POE clearance is required only when there is “Emigration Check Required” endorsement in the passport.

Auditing services in India

Stock Audit in India

Stock audit is a region of specialization and core competence for PK Chopra & Co. . Internal Audit Services are our greatest due to our unparallel reach and every one India network. Assets e.g. Stocks and physical assets like raw materials are important real assets and wish repeat watch. As a large number of companies are operating across the borders through multiple locations, some even with various channel partners, ensuring this watch is challenge. we provide our focused services to companies to stay them assured of their physical assets.

In other words, stock audit may be a statutory process which each business institution must perform a minimum of once during a fiscal year . As far the stock audit process cares , the method mainly involves the counting of physical stock presenting the required premises and verifying an equivalent with computed stock maintained by the corporate . the rationale and purpose behind executing this is often to correct the discrepancies present within the book stock in comparison to physical stock by passing necessary adjustment entries.

Fixed Assets Audit in India

Fixed assets are the long term assets that record within the record and showing balance at the top of the reporting date. Fixed assets are non-current assets that have a useful life for quite one years.

Fixed assets aren’t recognized as expenses within the earnings report at the time of buying but it’s recognized as expenses when the entity uses them.

Fixed assets are normally large if we compare to other assets like current assets. and that they are generally considered as sensitive areas from the audit perspective. The auditor responsible on these areas should be the one that has experiences and knowledge enough otherwise the detection or audit risks could be increasing.

Major Tax Benefits for a salaried taxpayer

Salaried taxpayers form a major chunk of the overall taxpayers in the country and the contribution they make to the tax collection is quite significant. Income tax deductions offer a gamut of opportunities for saving tax for the salaried class. With the help of these deductions and exemptions prescribed under Income Tax Act, 1961, one could reduce his/her tax substantially.

In this article, we list some of the major deductions and allowances for the FY2019–20 available to the salaried persons, using which they can minimize their tax burden and plan their salary structure and savings accordingly.

A. Allowances (sec 10)
 Allowances are part of salary given to employees to meet some particular requirements connected with the services rendered by the employee. They may be fully taxable, partially taxable or fully exempt.

♦ House Rent Allowance (HRA)
 This component of salary helps take care of rent paid by an employee for the premises in which he lives. To be able to claim this deduction, it is essential that it forms a part of one’s salary. Amount paid as HRA can be claimed as tax exempt, subject to certain terms and conditions as below.

Least of the following is exempt:

• Actual HRA Received
• 40% of Salary (50%, if house situated in Mumbai, Kolkata, Delhi or Chennai)
• Rent paid minus 10% of salary [* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission]

It is fully taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent. Further, it is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1 lakh.

♦ Entertainment Allowance:
 It is taxable as salary income. In case of government employees, it is first added to salary and thereafter least of following is deductible from salary in respect of entertainment allowance:

• Rs. 5,000/- or
• 20% of Salary or
• Amount of entertainment allowance

*Salary for this purpose excludes any allowance, benefit or other perquisites.

♦ Special Allowances: Under Special Allowances, allowances are divided in following two categories:

I) When exemption depends upon actual expenditure incurred by the employee (Official Allowances): In this category, allowances are exempt u/s 10 to the extent of amount of allowance is used for the purpose for which the amount is received. The amount of exemption under this category is least of following:

• Amount of allowance; or
• Amount used for the purpose for which allowance is given

On the above basis, exemption is available in case of the following allowances:

• Travelling Allowance / Transfer Allowance
• Conveyance Allowance
• Daily Allowance
• Helper/ Assistant Allowance
• Research Allowance
• Uniform Allowance

II) When exemption does not depend upon actual expenditure incurred by the employee (Special Allowances): In this category, the amount of exemption does not depend upon actual expenditure incurred by the employee but depends upon amount specified in the income tax rule in respect of concerned allowance specified under this category. Allowances received under this category exempt to the extent of lower of following:

• The amount of allowance; or
• The amount specified in the income tax rules

Such allowances are as below:

♦ Children education allowance
 An education allowance of Rs. 100 per month or Rs. 1,200 per annum per child (maximum of 2 children) paid to an employee by an employer is allowed as deduction from taxable income to the employee.

♦ Hostel expenditure allowance
 Hostel expenditure allowance of Rs. 300 per month or Rs. 3,600 per annum per child paid to an employee is also allowed as a deduction from taxable income towards meeting hostel expenditure for the child. This deduction is granted up to a maximum of 2 children for the employee.

An optimum salary structure is that which enables you to meet your day-to-day expenses while leaving sufficient money in your hands for long-term financial goals. Hence, in each individual case, you have to gauge whether the benefits offered by the employer holds value for you and accordingly, you should structure your salary package.

♦ Leave Travel Allowance (LTA)
 An employer provides LTA to employees to help them meet travel expenses incurred for travel with family to any place in India. Exemption from tax is only for an amount equal to the cost of travelling the shortest distance to the destination whether by air, rail or recognized public transport system.

♦ Food coupons
 Food allowance can be given by the employer through the provision of food at working hours or through pre-paid food vouchers/coupons. For instance, vouchers (not transferable) are tax-exempt to the extent of Rs 50 per meal.

♦ Gifts or vouchers provided by employer
 Gifts or vouchers given by an employer in cash or in kind are tax exempt up to Rs 5,000 per year.

♦ Others
 Others are Special Compensatory Allowance, Border/ Tribal Area Allowance, Compensatory/ Highly Active Field Area Allowance, High Altitude Allowance, Island Duty Allowance and Underground Allowance.

B. Deduction from salary (sec 16)

♦ Standard Deduction:
 Rs. 50,000 or the amount of salary, whichever is lower

♦ Entertainment Allowance
 Entertainment Allowance received by the Government employees (Fully taxable in case of other employees)

♦ Employment Tax/Professional Tax:
 Amount actually paid during the year is deductible. However, if professional tax is paid by the employer on behalf of its employee than it is first included in the salary of the employee as a perquisite and then same amount is allowed as deduction.

C. Perquisites (sec 17)
 Perquisites are fringe benefits that are received over and above the salary as a result of their official position. This is taxed separately for accountability and taxability. They may be provided in cash or in kind. Perquisites may be fully taxable, partially taxable or fully exempt. They are discussed as below:

♦ Rent free accommodation:
 The rent free accommodation provided to employees by their employer is taxable. Since the employees are provided rent free accommodation, the amount of income accruing to them cannot be determined by them. Accordingly, there is prescribed manner for calculating income chargeable to tax as perquisite.

♦ ESOP/ Sweat Equity Shares:
 The Companies in appreciation of its employees or with an aim to achieve a particular objective grants an option to the employees to subscribe equity shares at nil value or at concessional rates than the current market prices to its workforce. If the employee exercises such option and subscribes to such shares at nil or concessional rates, then it forms part of perquisites.

♦ Employer’s contribution towards superannuation fund:
 Employer’s Contribution up to Rs. 1,50,000/- is exempt in the hands of the employee. Employee’s Contribution to Superannuation Fund is allowed as deduction under Chapter VIA.

♦ Interest free loan or Loan at concessional rate of interest:
 The value of the benefit to the employee as a result of interest-free loan or concessional loan for any purpose provided to the employee or any member of his household is a taxable perquisite.

♦ Payment by the employer in respect of an obligation of employee:
 In this case, the amount is liable to be paid by the employee and the employer pays the same. However, if the employer pays taxes on behalf of employees on non-monetary perquisites provided to them, then such taxes are exempt in the hands of the employee.

♦ Others

• Furnished accommodation in a Hotel
• Motor Car / Other Conveyance
• Supply of gas, electricity or water for household purposes
• Services of a domestic servant including sweeper, gardener, watchmen or personal attendant
• Education Facilities
• Free food and beverages
• Gift or Voucher or Coupon on ceremonial occasions or otherwise
• Medical facilities in/ outside India

D. Retirement Benefits (sec 10(10))

♦ Gratuity

Gratuity is a payment received by an employee by his employer as a gratitude for the employee’s services to the organization. It is over & above normal salary & other retirement benefits received by an employee.

♦ Pension

Pension means the employer provides to the employee a fixed monthly amount after his retirement in consideration of past services. Pension can also be called as annuity.

It also covers pension under National Pension System (NPS).

♦ Leave Encashment

In employment, the employer allows a few number of paid leaves to the employees. If the employee fails to take leaves, then the employer may allow him to either accumulate the leaves for future or lapse the leaves. If the employee does not take such leaves then the balance of leaves accumulates. On retirement, the employer pays to the employee the salary that would accrue to him on the accumulated leaves. This is known as leave encashment. Leave Encashment is also known as leave salary.

♦ Retrenchment Compensation

If the employer relieves an employee of his duties for reasons other than death, retirement or disciplinary action against the employee, then the employer is liable to compensate the employee. The compensation received is known as Retrenchment Compensation.

♦ Voluntary Retirement Receipts

Sum received by an employee who opts for a Voluntary Retirement Scheme is known as Voluntary Retirement Receipt. The employer provides such option to the employees in order to reduce his surplus workforce.

♦ Employees’ Provident Fund

It is a savings scheme wherein employer and employee contributes a certain amount of money every year and employee receives the cumulative amount of money on retirement. There are various types of Provident Funds:

• Public Provident Fund (PPF)
• Statutory Provident Fund
• Recognized Provident Fund
• Unrecognized Provident Fund

Maturity amount and interest earned are fully exempt from tax.

Major Tax Benefits for a salaried taxpayer

Inventory audit in India

Inventories are tangible property held for sale in the ordinary course of business, or in the process of production for such sale, or for consumption in the production of goods or services for sale, including maintenance supplies, consumable stores and spare parts meant for replacement in the normal course. Inventories normally comprise raw materials including components, work-in-process, finished goods including by-products, maintenance supplies, stores and spare parts, and loose tools.
Inventories normally constitute a significant portion of the total assets, particularly in the case of manufacturing and trading entities as well as some service rendering entities. Audit of inventories, therefore, assumes special importance.

ICAI Guidance Note on Audit of Inventories

The Guidance Note deals with procedures of the auditor in respect of audit of inventories. It outlines the peculiar features of inventories, which impact the audit procedures.
The following is a gist of the important aspects of audit of inventories covered by the Guidance Note:

• Internal Control Evaluation: It involves segregation of incompatible functions, standard form for recording movement of inventory, cross checking of data generated by different departments. The auditor should also review specific controls over receipts, issues, physical inventories, and inventory records.
• Verification: It is the management’s responsibility for physical verification. In carrying out an audit of inventories, the auditor is particularly concerned with obtaining sufficient appropriate audit evidence to corroborate the management’s assertions regarding the following:

Verification of inventories may be carried out by employing the following procedures:

• Examination of Records: The extent of examination of records by an auditor with reference to the relevant basic documents (e.g., goods received notes, inspection reports, material issue notes, bin cards, etc.) depends upon the facts and circumstances of each case. The auditor may come across cases where the entity does not maintain detailed stock records other than the basic records relating to purchases and sales. In such situations, the auditor would have to suitably extend the extent of application of the audit procedures.
• Attendance at Stock Taking: The need for auditor’s attendance at stock taking would depend upon his assessment of the efficacy of relevant internal control procedures. The procedures concerning the auditor’s attendance at stock-taking depend upon the method of stock-taking followed by the entity (i.e. Periodic or continuous method). The auditor should observe the procedure of physical verification adopted by the stock-taking personnel to ensure that the instructions issued in this behalf are being actually followed. He should also examine whether the entity has instituted appropriate cut-off procedures.
• Confirmation from Third Parties: Where significant stocks of the entity are held by third parties, the auditor should examine that the third parties are not such with whom it is not proper that the stocks of the entity are held. The auditor should also directly obtain from the third parties written confirmation of the stocks held.
• Examination of Valuation and Disclosures: The auditor should satisfy himself that the valuation of inventories is in accordance with the normally accepted accounting principles and is on the same basis as in the preceding year. The generally accepted accounting principles involved in the valuation of most types of inventories are dealt with in Accounting Standard (AS) 2, “Valuation of Inventories”, issued by ICAI. Also, he should examine the evidence supporting the assessment of net realizable value. The auditor should satisfy himself that the inventories have been disclosed properly in the financial statements.
• Analytical Review Procedures: The following analytical review procedures may often be helpful as a means of obtaining audit evidence regarding the various assertions relating to inventories:

(i) reconciliation of quantities of opening stocks, purchases, production, sales and closing stocks;
(ii) comparison of closing stock quantities and amounts with those of the previous year;
(iii) comparison of the relationship of current year stock quantities and amounts with the current year sales and purchases, comparison of the composition of the closing stock, comparison of significant ratios relating to inventories, etc.

• Work in Progress: the auditor has to carefully assess the stage of completion of the work-in-process for assessing the appropriateness of its valuation. For this purpose, the auditor may examine the production/costing records (e.g., cost sheets), hold discussions with the personnel concerned, and obtain expert opinion, where necessary.
• Management Representations: The auditor should obtain from the management of the entity, a written statement describing in detail, the location of inventories, methods and procedures of physical verification and valuation of inventories. However, it does not relieve the auditor of his responsibility for performing audit procedures to obtain sufficient appropriate audit evidence to form the basis for the expression of his opinion on the financial information.
• Documentation by the auditor: The auditor should maintain adequate working papers regarding audit of inventories. He should maintain on his audit file a summary of each inventory as also the details regarding the extent of his verification. The management representation letter concerning inventories should also be maintained on the audit file.

The nature, timing and extent of audit procedures to be performed is, however,
a matter of professional judgement of the auditor.
responsible for stock taking, illustrative letter of confirmation of inventories held by others, illustrative letter of confirmation of inventories held by the entity on behalf of others and an illustrative management representation letter for inventories.

Grant Audit in India

In many ways not-for-profit organizations are no different from for-profit or commercial organizations. Their objectives and activities may be different but the day to day operations would more or less involve common activities like receipt and processing cash, tracking revenue and expenses, managing personnel, and financial reporting to stakeholders. Errors, misappropriations, frauds can happen in any organization and the extent of its impact is more if it affects those key processes that contribute to the accomplishment of the organizational objectives.

Funders expect not-for-profit organizations to justify the request for funding and its capability to use it in an effective fashion. The grant proposal should be able to bring out how the applicant’s research has determined, and demonstrate, that the project being presented is central to the funder’s agenda. Strong proposals offer compelling solutions to be carried out by competent, solvent applicants.

Also, if grants are not utilized as per decided terms or periodic reports are not sent, the funder will not make any further disbursements. It thus becomes essential for the internal auditor to review the proposals and management of grant and contribution programs.

Moreover, since the Foreign Contribution (Regulation) Act, 2010 (FCRA, 2010) is national security legislation; associations are required to exercise extreme care and caution in dealing with foreign contribution from the time of its receipt to its final utilization. As the Chartered Accountants audit the accounts of the associations and certify the accounts before submission to the Government, they are required to provide proper guidance to the association who is either applying for grant of prior permission/ registration or who have been granted prior permission/registration under FCRA, 2010.

ICAI has issued a Technical Guide on Internal Audit of NPOs. Internal auditors need to pay special attention to the accounting practices of an NPO. Accordingly, he has to first gain an understanding of the process and then go into details for auditing the management of grant. Steps are as below:

First Step: Details of Grants

The Internal auditor should obtain:

(i) A list of all grants procured by the organization, including the amount of grant, time frame for fund usage, and the specific program, service or project the money has been designated for. Get copies of any specific financial arrangements or contracts required by the grant-making organization.

(ii) Documentation on entity’s goals and its strategy to achieve them. The entity would have a plan on amount of money required and use of the money along with detailed procedures for executing the plan.

Second Step: Service Provision and Outcomes

A well-documented service provision and outcomes should have the following details:

(i) The mission statement and listing of all the services the organization provides to the community under the umbrella of the mission. Major Areas of Internal Audit Significance

(ii) Documentation of the scope of those services, i.e., how large is the service area? Is the organization state, county or citywide? List the population the organization serves; is it a specific population, such as individuals with disabilities, homeless or battered women, or children?

(iii) Documentation of outcomes, or how the NPO’s services positively affect the population it serves, number of people affected and length of time individuals utilize the services of the NPO.

Third Step: Information on Project

Obtain knowledge of the policy history, the program results desired, critical success factors, risks, known weaknesses, as well as matters specific to the program under review. At the core of internal auditing, grants and contributions is the determination of whether financial management and control is adequate. There should be clear evidence for the following:

(i) Support for appropriate decision-making at all levels;

(ii) Availability of timely, relevant and reliable management information, both financial and non-financial;

(iii) Management of risk;

(iv) Efficient, effective and economical use of resources;

(v) Accountability for the use of resources;

(vi) A compliance with authorities and safeguarding of assets; and

(vii) Monitoring and reporting of actual results.

In short, auditing grants and contribution programs amounts to the determination of an appropriate level of due diligence in the management of funds.

Fourth Step: Project Management and Implementation

(i) Has the management reviewed the program design to ensure that it provided for effective control?

(ii) Are the results expected from the program clear, measurable, directly related to objectives?

(iii) Do the eligibility and assessment criteria, and any associated direction, directly address and contribute to these expected results?

(iv) Does the program design address relevant risks?

(v) Is there a centre of expertise/central review group for grants and contributions in the organization to assist program management?

(vi) Are responsibilities well defined – in particular, those of people who are not program staff but are involved in funding decisions?

(vii) Do available resources (human, physical, financial and other) match the workload for the program?

(viii)Are responsibilities among staff supportive and clear?

(ix) Does staff have the time and means to enforce the rules and carry out their responsibilities?

(x) Does staff have information, tools and essential resources to do their jobs well?

(xi) Does staff know how to assess an application under the program, and how to monitor a project with due diligence?

Fifth Step: Project Reporting

(i) Are actual project results measured and rolled-up?

(ii) Is there on-going program information on achievement of expected results?

(iii) Are there compliance audits/reviews of projects?

Grant Audit in India | Internal Audit in India