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

During a CSR audit of Narmada Steels Ltd, the auditor finds that Rs 40 lakh was paid to an implementation agency, but no utilisation certificate, project report or beneficiary record is available. What is the most appropriate audit response?

The auditor should report the missing documentation as an observation and try to corroborate the spending through site verification and agency records. Payment by cheque only shows money moved, not that it was used on the approved project, so it cannot be accepted as sufficient evidence.

  1. ATreat the amount as validly spent because payment was made by cheque
  2. BIgnore the matter since the amount is below the CSR obligation
  3. CReport the lack of supporting evidence as an observation and seek corroboration such as site verification and agency recordsCorrect
  4. DCancel the CSR policy of the company

Explanation

Payment alone does not prove that the money was used for the approved project. The auditor must obtain sufficient appropriate evidence, for example agency records and site visits, and report the gap if it is not resolved. Accepting payment as proof would be an error of relying on weak evidence.

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