Audit for Charitable Trust

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Enterslice’s Ensure Experts Audit for Charitable Trusts

An Audit for Charitable Trust is an examination of financial records, business operations and compliance in accordance to the legal and regulatory requirements. An Audit for Charitable Trust is conducted to ensure transparency, accountability and systematic use of finances for charitable purposes. An Audit for charitable trusts ensures regulatory compliance related to the Non-profit organisation and verifies the accuracy of financial records or statements to maintain the financial stability of charitable trusts. At Enterslice, we have a team of specialized audit experts who offer Audit for charitable trusts. Our professionals are experts in financial scrutiny and regulatory compliance, ensuring transparency and accountability in fund usage, and are more likely to contribute audit for charitable trusts to secure sustainability and impact. We work closely with client businesses, conduct thorough examinations and analyses of financial records, and help clients identify areas where improvements are required. Our experts at Enterslice offer valuable insights which help client to enhance their corporate governance and mitigate business risks accordingly.

Why is it essential to conduct an audit for Charitable Trust?

Several reasons make it essential to conduct an audit for Charitable Trust

Financial Transparency and Accountability

An Audit for charitable trust requires an independent and objective evaluation of charitable trust financial records and business operation to ensure transparency, proper records, recording and use of financial transactions. An Audit for charitable trust builds trust among its donors, beneficiaries and the public at large.

Compliance with Legal and Regulatory Requirements

An Audit for charitable trust is very important to stay at the forefront of the ever-evolving regulatory landscape. However, a wide range of different laws and regulations are applicable to charitable trusts. An Audit for charitable trust is performed with an intent to verify whether the trust is in compliance with regulatory norms such as taxations laws, reporting obligations and any other regulatory obligations issued on a timely manner for charitable trusts. Non-compliance with the regulatory norms can give rise to legal consequences and loss of tax-exempt status.

Prevention of Financial Mismanagement and Fraud

An Audit for charitable trust helps to prevent charitable trust form financial mismanagement and frauds. The Audit for charitable trust is assessed to identify the potential weakness of trust and help the management protect the trust from financial mismanagement, fraud, and misuse of funds and safeguard the assets and reputation.

Stakeholder confidence

Within a charitable trust, mainly the donors, beneficiaries, and other potential stakeholders depend on the transparency and credibility of trust. An Audit for charitable trust showcase the trust commitment towards financial usage and best practice, enhancing the confidence of stakeholders and attract more donors.

Board Governance and Oversight

An Audit for charitable trust ensure the trust’s board of directors or trustee are complying their responsibilities The independent assessment of charitable trust operations enhance board members to make informed decisions.

Effective Resource Management

An Audit for charitable trust helps to identify opportunities for improving resource management, cost efficiency and overall financial sustainability. An Audit for charitable trust facilitates valuable insights for making informed decisions and enhancing the trust’s impact.

Preventing and Addressing Issues

An Audit for charitable trust helps to identify the potential issues and areas of improvement. It enables the trust to take corrective actions, establish better internal controls and implement best practices to prevent problems from recurring.

Enhanced Credibility

When independent professionals conduct an audit for charitable trust, they are more likely to add credibility to the trust's financial reporting and operations. The audit report is valuable for demonstrating transparency and adherence to financial standards.

Legal and Regulatory Compliance Reporting

There is a requirement for non-profit organisations to undergo annual audits and report the results to regulatory authorities. Failure to comply with these reporting obligations can result in legal penalties and negative consequences for the trust.

Why is an Audit for charitable trust required?

Audit for charitable trust is required for the following reasons

Audit Threshold

As per section 12A (1) (b) of the Income Tax Act, an audit is mandatory if the entire income of the organisation for the appropriate year is more than the greatest or maximum amount not liable to income tax.

Audit Exemption

The eligibility for audit exemption for charitable trusts depends on the gross income and certain other conditions. Audit is exempted if the total income, before considering the provisions of the Act, does not surpass the maximum exempt amount, then an audit is not required.

Inclusion of Corpus contributions

Contributions or grants directed towards the organisation's corpus must be added to calculate the ceiling limit of non-taxable amounts under section 12(1) (b).

Exclusion of certain income exemptions

Income exemptions under section 10, such as dividends, should not combine to exceed the non-taxable maximum amount.

Unforeseen Situations

In some instances, even if the total income exceeds the maximum limit due to specific incidents such as unforeseen misapplications of investments under section 11(2)(b), the audited reports can be submitted with corrected returns.

Deductions for Donations

Donations collected by organisations are exempt under sections 11, 12 and section 10 (23), (23AA) or (23C).

Account’s Role in Audit for Charitable Trust or NGO

The major role of the accountant is to conduct the Audit for Charitable Trust as per Section 12A. However, no obligation exists for the accountant to validate compliance under other laws,

Additional Requirements

Except for section 12A (1) (b), other essential requirements exist. The registration requirements are dealt with under section 12A (1) (a), necessitating trust registration applications in Form No,. 10A as per Rule 17A.

Importance of Financial Professionals in Audit for Charitable Trust

Consulting legal and financial professionals when conducting an Audit for charitable trust is essential for several reasons:

Compliance with legal requirements

Such professionals are well-versed with complex laws and regulations that govern charitable organisations. Such professionals make sure that the audit for charitable trusts complies with the applicable laws like tax laws, reporting requirements, and state or federal regulations specific to non-profits. Failure to comply with the Audit for charitable trust in accordance with laws leads to penalties or loss of tax-exempt status.

Expertise in Non-Profit Regulations

Experts are experienced in non-profit accounting and auditing. They understand the unique financial and reporting requirements that apply expertise to complete Audit for charitable trusts. They also ensure that the Audit of charitable trusts is conducted as per accounting principles (GAAP) for non-profit organisations.

Risk Mitigation

Legal and financial experts identify potential legal and financial risks that the charitable trust may face. These issues must be addressed proactively to ensure that the organisation can reduce the risk of legal disputes, financial mismanagement or reputational damage.

Guidance on Best practices

Experts in this field provide valuable insights into the best practices for financial management, internal controls and governance. Following the advice of experts can help charitable trusts operate more efficiently and transparently.

Board and Stakeholder Confidence

The involvement of legal and financial experts gives the impression that the organisation takes its financial stewardship and compliance seriously. It also enhances confidence in the organisation's operations and accountability.

Complexity of Non-profit Finances

Non-profit financial reporting is more intricate than that of for-profit business due to the need to track and report on various revenue sources, restrictions on funds and compliance with donor requirements. Experts can navigate these complexities effectively.

Identification of Potential Issues

Professionals can easily spot potential issues, irregularities or areas of non-compliance that the internal staff might have missed. Experienced professional's perspectives and objectives can help uncover and address problems early.

Audit Quality

The quality and credibility of audits increase when professionals are involved. The involvement of professionals can be important when communicating audit results to donors and stakeholders who rely on the audit report to decide on their involvement with the charitable trust.

Audit Challenges for Charitable Trusts without Financial Experts

Non-compliance with legal and Regulatory Requirements

Different laws and regulations govern charitable trusts in India. Without any legal experts, these organisations may unintentionally violate the requisite rules and regulations, which may lead to potential regulatory consequences. Non-compliance with the Audit for charitable trusts as per regulatory laws may cause the imposition of fines, penalties, or loss of tax-exempt status.

Financial Mismanagement

Financial experts are well versed with the appropriate skills to perform Audit for charitable trusts, which includes accounting and auditing. Without proper expert guidance, it is possible to have a high risk of financial mismanagement, errors in financial records, reporting, and mishandling of funds, which may ultimately damage the reputation of an organisation.

Lack of expertise in Non-profit Accounting

Non-profit organisation accounting is complex in nature, which includes funds accounting, restricted and unrestricted funds tracking and regulatory compliance. The Audit for charitable trust may not be accurately done without having financial professional guidance.

Inadequate Risk Mitigation

The financial experts of Audit for charitable trusts are more likely to help clients or businesses identify potential risks such as conflict of interest, fraud, and other corporate governance issues. Without their absence, such risks may go unaddressed and may lead to potential regulatory problems in the future.

Loss of Stakeholder Confidence

All the potential stakeholders totally depend upon the transparency and credibility of the charitable trust, and this can be only achieved through a successful completion of the Audit for the charitable trust. Without having a proper audit for charitable trust through professional experts, it may cause damage to stakeholder confidence.

Ineffective Internal Controls

The professionals assess and recommend improvements to internal controls and financial management practices without proper guidance. The organisation may not have an effective mechanism in place to prevent financial irregularities.

Missed Opportunities for Improvement

Professionals give valuable recommendations for best practices and governance and financial management improvements. In the absence of their input, the organisation may miss the opportunity to enhance its operations.

Complexities of Donor and Grant Management

Donors are required to adhere to specific donor requirements. They have to be adhered to while managing grants and donations. Failure to manage these funds can result in non-compliance and potential donor disputes.

Less Credible Audit

Not engaging legal and financial experts can affect the credibility and quality of the Audit. This can reduce the stakeholders' confidence in the audit results and can impact their willingness to support the charitable trust.

Reputation Damage

The reputation of the charitable trust can be damaged by mismanagement or non-compliance. It results in reduced donor support, reluctance from beneficiaries to engage with the organisation and a negative impact on the trust's mission.

We facilitate Audit and Assurance Services

Our Audit and Assurance Services include a wide range of financial activities to ensure the integrity, accuracy, and compliance of financial reporting as per regulatory norms and to manage the internal control system within the charitable trust. At Enterslice, we have a team of experienced and qualified auditors and assurance who are more likely to examine, verify, and report on diverse financial factors of an organisation's operations.

Our experts at Enterslice primarily focus on Audit for charitable trusts to provide stakeholders such as shareholders, investors, creditors, and regulatory authorities with more confidence in the reliability and completeness of financial information duly presented by an organisation. Our experts work closely with client businesses and help them identify inaccuracies, inconsistencies, or irregularities within financial reporting.

Our expert audit for charitable trust services extends beyond the financial statements audit to the assessment of internal control systems. We work closely to assess and evaluate the effectiveness and accuracy of internal control management to safeguard the organisation's financial assets, prevent potential fraud, and ensure compliance in accordance with applicable norms and regulatory guidelines. Through Audit for charitable trusts, we help client business recognize their potential weaknesses and deficiencies in the internal system and are more likely to support the organisation in strengthening their governance structure and mitigating the potential audit risks. We offer audit for charitable trusts with specialized Audits and assurance. Our experts help to recognize the unique challenges faced by NGOs while maintaining transparency and accountability in the financial landscape. Utilizing our expertise in Audit for charitable trust, Non-profit organisations can easily achieve their long term success and sustainability in their business operations.

We offer Statutory Audit for charitable trusts

Statutory audits as external audits are very important and specifically made mandatory by the applicable laws and regulations that ensure the accuracy, reliability, and accountability of a charitable trust and its operations. At Enterslice, our experts know the value of statutory Audits, are specialized in conducting such audit for charitable trusts, and offer detailed examinations to verify the integrity and compliance of any financial records. Our experts are well versed with the regulatory norms and facilitate statutory Audit for charitable trusts. We work closely with and assess the client's business and provide expert assistance to adhere to legal and regulatory standards. A statutory audit for charitable trust is very important as it demonstrates the transparency, accountability, and responsible management of funds, which is very important to gain the trust and confidence of stakeholders, donors and regulatory authority.

Our experts offer a wide range of statutory audit for charitable trusts, which include compliance with tax laws, financial reporting obligations, and other legal requirements. We conduct a thorough assessment and evaluation of charitable trust financial statements and its operations to ensure the organisation can easily meet its regulatory obligation and provide valuable insights for its stakeholders and regulatory authority. Utilizing our expert's statutory Audit for charitable trusts, businesses and trusts are more likely to operate within the ambit of legal and regulatory standards.

Our Tax Compliance and Planning

As we know, tax compliance refers to adherence to taxation rules and regulations regarding taxation led by the central government. In a broader sense, it ensures and makes sure that your financial reports are accurately reported as per your business income and expense; you need to file the necessary taxation form and meet the taxation deadlines. At the same time, tax planning is something more advanced and smart tips aligned with your business finance to minimize the taxation amount. Our experts at Enterslice have in-depth knowledge and understanding of taxation laws. We assess our client business and provide valuable insight, which includes strategic decisions such as taking advantage of deductions and credits and structuring your business investments in a tax-efficient manner. Within our Audit for charitable trusts, we offer tax compliance to ensure our client business can easily meet all the legal and regulatory requirements to maintain their tax-exempt status forever; while tax-planning, we are supposed to help them minimise their taxation liabilities. Our experts at Enterslice provide facilities services to help in audit for charitable trusts and explore both compliance and planning in a more effective and efficient manner.

We help in Grant and Donation audit for charitable trusts

At Enterslice, our experts are specialized in conducting grant and donation audit for charitable trusts. We work closely with client businesses and assess an in-depth examination of financial transactions associated with grants and donations duly received by non-profit organisations. Our professional experts scrutinize such funds and ensure their proper utilization must adhere to donor stipulations and the organisation's business objectives and goals. We offer comprehensive grants and donation audit for charitable trusts and help them manage and maximize the impact of grants, funds, and donations with the intent to create transparency and accountability in the organisation. Through our extensive and thorough examination procedure, we ensure the resources are allocated efficiently and in accordance with the charitable trust objective and regulatory standard.

We help manage Internal Controls and Risk Assessment

Our Experts at Enterslice are determined to support the charitable trust in navigating complex aspects of internal controls and risk assessments. We work closely with client businesses to empower them and help identify, assess, and mitigate business risks while optimising operational efficiency. Our professional experts at Enterslice are adept at providing Audit for charitable trusts and support to manage internal control systems and mitigate potential risks. We assess the potential risk of charitable trusts, help develop appropriate strategic enhancements, and manage financial mismanagement and other fraudulent activities to safeguard the interests of a charitable trust.

We support Compliance with Non-profit Laws

At Enterslice, our experts prioritize ensuring Audit for charitable trusts and their compliance with non-profit laws and regulations to protect the organisation in the charitable landscape. Our determination is very important for charitable trusts as it facilitates a guarantee to adhere to the specific laws and regulatory norms which govern the entire charitable trust sector. Our team at Enterslice ensures the Audit for charitable trusts in such a manner that these trusts can easily meet all regulatory obligations. Our professional approach includes compliance with trust deeds, the charitable trust registration process, and regulatory rules in order to create transparency and accountability within the entire charitable trust. We are determined to provide expert support and detailed guidance to empower non-profit organisations in exploring the complex regulatory landscape while upholding charitable trust objectives.

We provide Consultation on Financial Reporting

Our experts at Enterslice are specialized in offering comprehensive consultation services for financial reporting. We provide guidance to businesses and organisations to navigate the complex financial reporting and disclosure requirements landscape. We prioritize adherence to the specific principles of accounting (GAAP), especially for non-profit organisations, to ensure their accuracy and transparency within the financial statements. Our professional experts provide a wide range of consultations, which include compliance as per accounting laws, preparation of financial statements, review and analysis, financial modelling, audit preparation, internal control assessment, and many more. With our extensive guidance on audit for charitable trusts, non-profit organisations can confidently stay compliant and get valuable financial insights, which helps them make informed business decisions.

We facilitate good Governance and Best Practices

With a focus on delivering good governance and implementation of best practices, our experts at Enterslice facilitate audit for charitable trusts to ensure their business operations are aligned ethically and effectively. Our professionals at Enterslice, advocating for transparency, accountability, and sustainability, offer comprehensive assistance on board composition, conflict of interest policies and governance structure of charitable trust. Our expert offers Audit for charitable trusts in a manner that enhances organisational integrity and support to secure their business objectives. At Enterslice, our professionals know the importance of sound governance practices, which help to dive into success and empower charitable trust with knowledge and strategies to secure sustainable business objectives and good leadership.

We Assist Charitable trusts with Audit Committee Set up

Our experts at Enterslice support charitable trusts to establish robust audit committees, which is a crucial component of good governance. We have experienced professionals who work closely with charitable trusts, develop strategic planning, and ensure an effective and efficient setup and operation of audit committees for trusts. We work closely and assess audits for charitable trusts and are more likely to offer expert insights and guidance in the trust committee’s formation to ensure transparency and accountability. Our expertise in auditing for charitable trusts can easily ensure the fulfilment of regulatory obligations and build public trust.

Our Advisory Services for charitable trust

Our experts at Enterslice offer comprehensive and customized advisory services for charitable trusts to address their unique challenges. We have a team of professionals who are likely to provide consulting on diverse aspects, including financial management, fundraising strategies, and maintaining a healthy relationship with donors. We leverage our expertise; charitable trusts are more likely to make informed business decisions to enhance their all-round performance and financial stability. Professionals at Enterslice offer customized guidance and valuable insights that help empower charitable trusts to optimize their resources and maximize their impact socially. Whether it relates to raising funds or strengthening governance practices, our experts at Enterslice are determined to offer advisory services and audit for charitable trusts to support them in securing their business objectives in accordance with regulatory norms.

Frequently Asked Questions

The limit for Audit for Charitable Trust is INR 5 crore in the previous financial year.

Audit for Charitable Trusts is conducted under the Income Tax Act 1961.

Yes, Section 44AB is applicable to charitable trusts.

The due date for furnishing Audit Reports in Form 10B/Form 10BB for the Financial Year 2022-23 was 30.09.2023, which CBDT has further extended to 31.10.2023.

Yes, an audit is mandatory for charitable trusts if the total income of a charity trust or NGO exceeds the amount that makes it tax-exempt.

A taxpayer is required to carry out a tax audit if the sales, turnover or gross receipts of business exceed INR 1 crore in the financial year.

A charitable audit is an audit where the auditor obtains a list of members to verify the number of subscriptions and a list of regular donors to know the nature and purpose of donations of regular donors.

If any trust or non-profitable organisation is not registered under section 12A, then their financial receipts or transactions would be considered taxable.

Audit is compulsory under section 44AB of the Income Tax Act.

A statutory audit is an audit that is compulsory by any statute.

Yes, charities need internal audits to meet the Charity Commission requirements, achieve maximum benefits from resources, and focus better on achieving outcomes. A valued internal audit also helps you deliver your strategic objectives more efficiently and effectively. .

Yes, CA is compulsory for auditing as auditing in India is a regulated profession that can be carried out only by a chartered accountant (CA).

An auditor reviews laws and regulations applicable to the non-profit sector, including tax-exempt status compliance and fundraising restrictions.

Yes, an audit is necessary to audit every year if the total sales, turnover or gross receipts from the business during the previous year exceeds INR 1 crore.

The two types of Auditing are

  • Internal Audit
  • External Audit

Yes, the Income Tax Act has made it a mandatory provision for a trust to make an application for the allotment of PAN. PAN for trust is to be applied in Form 49A of the Income Tax Rules. Not making a PAN application will lead to a penalty of up to INR 10,000/-.

Yes, TDS provisions shall apply to the Charitable Trust.

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