There are more than Eight Lacs Charitable Trust in state of Maharashtra. Recent past has noticed a radical shift in the manner in which regulatory authorities of “Digital India” are looking at non compliances pertaining to Public Charitable Trust. The website of “The Office Of Charity Commissioner Of Maharashtra State” hosts a listing of more than 33 locations in Maharashtra where historic drive of deregistration of very large number of trusts had been executed for non-compliances pertaining to relevant applicable statutes. September 2017 evidenced the ruckus of cancellation of licenses for around 4,800 NGOs for non-compliances pertaining to FCRA ( Foreign Currency Regulation Act 2010), further the total number of NGOs who have lost their licenses in past five years has jumped to around 24,000.
While all above actions by regulatory authorities are essential for sanitising our systems, yet such news could overwhelm large number of Trustees of those Charitable Trusts who are engrossed in their philanthropic work and are unwary to the compliances imposed by relevant statutes. Enlisted below are few such points which could enable stakeholders to understand applicable statute and ensure its compliance:
1. Regularity in maintenance of Books Of Accounts,
2. Reproduction of books, documents and relevant information to auditors,
3. Cash balance reconciliations,
4. Maintenance of register for moveable and immovable properties and timely communication of changes therein to Deputy or Assistant Commissioner,
5. Application of funds or properties of trust for purpose other than the object of the trust,
6. Reasoning and justifications for any outstanding amounts for period of more than one year,
7. Ensure tenders being invited for repairs or construction made above Rs 5,000,
8. Ensuring compliance with the provisions of Section 35 of The Maharashtra Public Trusts Act while making any investments pertaining to the trust,
9. Ensuring compliance with the provisions of Section 36 of The Maharashtra Public Trusts Act while alienation of any immovable property of the public trust,
10. Filing of budgets in prescribed format of Schedule VII A. ( Section 31A read with rule 16A), (Budget needs to filed at least one month before the commencement of each accounting year),
11. Ensuring adherence to aspects of propriety, prudence and legality.
1. A public trust shall prepare and maintain a register of all moveable and immovable properties (not being property of a trifling value) of such trust in such form or forms giving all such information, as may be prescribed by the Charity Commissioner,
2. Format of register should be as prescribed by X-AA,
3. Such register shall show the jewels, gold, silver, precious stones, vessels and utensils and all other moveable property belonging to the trust with their description, weight and estimated value,
4. Details of all movable assets with their description, weight and estimated value to be maintained.
5. Such register shall be prepared within three months from the expiry of the accounting year,
6. Such register shall be signed by all the trustees or by any person duly authorised by trustees in this behalf after verifying its correctness.
Section 36A (3) of The Maharashtra Public Trusts Act : No trustee shall borrow moneys (whether by way of mortgage or otherwise) for the purpose of or on behalf of the trust of which he is a trustee, except with the previous sanction of the Charity Commissioner, and subject to such conditions and limitations as may be imposed by him in the interest or protection of the trust.
Its beyond the scope of this article to give an exhaustive list of applicable statutes for a public charitable trust, however above selective listing would surely give the readers a broad understanding of several regulatory compliances that are required to be adhered for successfully running the operations of a public charitable trust.It is said “Control leads to compliance and autonomy leads to engagement”. Considering the mammoth issues that some of the NGOs are attempting to resolve, compliance and engagement could be accomplished if the key management team embarks to design the control framework and thereafter ensure its periodic review and monitoring.
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The Author is a partner with YSP & Co LLP with over 20 years of experience in myriad areas of GST, Direct Tax, System Audits, Controllership and CFO Functions.The author could be reached at firstname.lastname@example.org / 8356097618 / 9619912774.