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CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

Himalaya Associates, a partnership firm, funds a health camp through public donations collected in the firm's general bank account along with its trading receipts. Auditors note that the donation amounts cannot be separately traced. Which recommendation best strengthens transparency?

The firm should keep a separate bank account and fund-wise records for donated amounts and report utilisation to donors. Segregation lets the purpose-restricted money be traced, whereas pooling, withholding receipts or treating donations as personal income destroys the audit trail and donor trust.

  1. AContinue pooling the funds since all money belongs to the partners
  2. BMaintain a separate bank account and fund-wise records for the donated amounts, and report utilisation to donorsCorrect
  3. CStop issuing receipts to donors
  4. DTreat the donations as the personal income of the managing partner

Explanation

Funds raised for a specific purpose should be segregated and tracked so that utilisation can be shown. Pooling hides the trail, and withholding receipts or treating money as personal income worsens accountability and may breach the donors' intent.

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