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CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

Internal auditors of Gram Vikas Society, an NGO receiving foreign contributions, review compliance. Which finding is the most serious in relation to foreign funding controls?

Receiving foreign contributions in a non-designated account and mixing them with local funds is most serious. Foreign funding rules require receipt in a designated account and separate utilisation records, so mixing destroys traceability and exposes the NGO to regulatory action.

  1. AForeign contributions were received in an account not designated for the purpose and were mixed with local fundsCorrect
  2. BThe society's letterhead lacks a logo
  3. CMeeting minutes were typed instead of handwritten
  4. DThe office stationery register is updated monthly

Explanation

Foreign contribution law requires receipt in a designated account and separate accounting. Mixing with local funds defeats traceability and risks regulatory action. The other items are cosmetic or routine and carry no legal consequence of that kind.

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