Helping Hands Charitable Institution is a registered charitable institution engaged in providing free education and healthcare services. During the…
CA Intermediate · Auditing and Ethics · MTP · September 2026
Helping Hands Charitable Institution is a registered charitable institution engaged in providing free education and healthcare services. During the statutory audit for the year ended 31st March, 2026, the auditor noted the following: The Trust Deed was amended during the year, but the amendments were not reviewed by the audit team. The trust receives income through annual membership subscriptions, life membership fees, donations, charity boxes and fundraising events. Receipt books are maintained manually. However, no register of unused receipt books is maintained, and several cancelled receipts were found without proper authorisation. Amounts collected through donation boxes and fundraising events are deposited into the bank after considerable delay. The total donations reported in the annual report issued by the institution do not agree with the amount recorded in the books of account. The institution has expanded its charitable activities during the year, but no verification was carried out to ascertain whether such activities are in accordance with the objects and governing provisions of the institution. As the statutory auditor of Helping Hands Charitable Institution, explain the audit procedures you would perform while auditing the institution, with particular reference to the following: the legal and constitutional framework governing the institution; the governance and management of the institution the adequacy of internal control over receipts and collections; and the audit of income, subscriptions and donations.
Suggested Answer and Working Notes:
In the case of audit of Helping Hands Charitable institution, attention should be paid to the following matters- (1) General (i) Studying the constitution under which the charitable institution has been set up. (ii) Verifying whether the institution is being managed in the manner contemplated by the law under which it has been set up. (iii) Examining the system of internal check, especially as regards accounting of amounts collected. (iv) Verifying in detail the income and confirming that the amounts received have been deposited in the bank regularly and promptly. (v) Examine the Trust Deed or the Regulations as laid down. (2) Subscriptions and donations (i) Ascertaining, if any, the changes made in amount of annual or life membership subscription during the year. (ii) Whether official receipts are issued; (a) confirming that adequate control is imposed over unused receipt books; (b) obtaining all receipt books covering the period under review; (c) test checking the counterfoils with the cash book; any cancelled receipts being specially looked into; (d) obtaining the printed list of subscriptions and donations and agreeing them with the total collections shown in the accounts; (e) examining the system of internal check regarding moneys received from box collections, flag days, etc. and checking the amount received from representatives, with the correspondence and the official receipts issued; paying special attention to the system of control exercised over collections and the steps taken to ensure that all collections made have been accounted for; and (f) verifying the total subscriptions and donations received with any figures published in reports, etc. issued by the charity. The auditor should obtain sufficient and appropriate audit evidence to conclude whether the charitable institution is functioning in accordance with its governing documents and applicable laws, whether adequate internal controls exist over collections, and whether all income, subscriptions and donations have been completely accounted for, promptly deposited and properly disclosed in the financial statements.
Topics: Special Features of Audit of Different type of Entities
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