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CS Professional · CSR and Social Governance · Social Impact Assessment and CSR Audit

During a CSR audit of Kaveri Steels Ltd, the auditor finds a project report from an implementation agency but no bills, bank statements or site photographs supporting the reported spend of Rs 40 lakh. What should the auditor treat as the key audit concern?

The key concern is insufficient appropriate audit evidence. A mere agency report does not prove that Rs 40 lakh was spent, so the auditor needs bills, bank statements and site verification before concluding that the CSR expenditure is genuine and properly utilised.

  1. AInsufficient appropriate audit evidence to support the reported CSR expenditureCorrect
  2. BExcess profit earned by the company
  3. CThe company having too many independent directors
  4. DLack of a registered trademark

Explanation

Audit conclusions must rest on sufficient appropriate evidence. A narrative report without bills, bank records or physical verification does not substantiate spending, so the auditor must seek vouching and verification. The other options are irrelevant to the facts.

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