You have been appointed as the statutory auditor of a society "Bright Future Welfare Society”, registered for promoting educational and social…

The auditor's considerations and procedures relevant in the audit of a society: (a) The auditor should ascertain governing legislation of society i.e. Societies Registration Act, 1860 or any applicable state law under which it has been registered. (b) Object of society needs to be ascertained from its memorandum of association/bye laws. Its activities may include charitable, social, cultural or educational activities. (c) Ascertain whether society has obtained registration under Foreign Contribution (Regulation) Act, 2010 in case foreign contributions are received. (d) Ascertain whether it is also registered under relevant provisions of Income Tax Act which may make it eligible for tax exemption on its income. (e) Obtain an understanding of internal control to design audit procedures with special reference to donations and various expenditures incurred in relation to achievements of objects of society. (f) Evaluate appropriateness of accounting policies with special reference to donations and grants. Also evaluate accounting policies in relation to specific grants. (g) In case some expenses incurred by society are reimbursed by donors, ascertain how these are recognised in financial statements. (h) Ascertain, if any inquiry has been held by Registrar under applicable law in the working or financial condition of society and its implications for auditor's opinion. (i) Ascertain all cases of irregular, illegal or improper expenditure or failure or omission to recover monies or other property belonging to society or of loss or waste of money or other property thereof. (j) Ascertain whether such expenditure or waste was caused in consequence of breach of trust or misapplication or any other misconduct on the part of governing body. Thus, in the audit of Bright Future Welfare Society, the auditor should ensure that the financial affairs and activities of the society are carried out in accordance with its stated objectives and the applicable legal and regulatory framework. Considering the receipt of grants, public donations, foreign contributions, reimbursement-based funding arrangements and the inquiry initiated by the Registrar of Societies, the auditor should exercise professional skepticism while evaluating the utilization of funds and governance practices of the society. The auditor should also evaluate the effect of any adverse findings, non-compliance, or irregularities in the financial statements and determine the consequential impact on the audit report, including the need for suitable reporting or modification, wherever necessary.