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In a CSR audit of Vikram Cements Ltd, the auditor notes that Rs 12 lakh of the approved plan remained unspent at year end and the Board report gives no reason. The auditee argues that audit scope covers only amounts actually spent. Which view is correct for a compliance-focused CSR audit?

The auditor should examine the unspent Rs 12 lakh, checking how it was treated, whether reasons were recorded and disclosed, and report any deviation. CSR audit scope covers allocation and disclosure along with actual spending, so the auditee's narrow-scope argument fails.

  1. AThe argument is correct because unspent amounts fall outside any audit
  2. BThe auditor should examine the unspent amount, whether the ongoing or other treatment and reasons were properly recorded and disclosed, and report any deviationCorrect
  3. COnly the tax department can examine unspent amounts
  4. DThe auditor should ignore it unless the amount exceeds Rs 1 crore

Explanation

Scope of a compliance CSR audit includes not only spending but also planning, allocation, treatment and disclosure of unspent amounts. An unexplained shortfall and missing Board report reasons are deviations to be reported. No arbitrary threshold such as Rs 1 crore exists for ignoring it.

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