NGO Management Past Paper PDF

Voluntary Action & NGO Management (Vocational/Skill Development) UNIT IV  Proposal Writing In order to approach any resource provider (community, government, donors or businesses), an NGO needs to have an effective project proposal in hand. Propos...

Voluntary Action & NGO Management (Vocational/Skill Development) UNIT IV  Proposal Writing In order to approach any resource provider (community, government, donors or businesses), an NGO needs to have an effective project proposal in hand. Proposal writing is an important aspect for the growth and development of the organisation. Proposals facilitate the implementation of programmes by NGOs, which are then funded by external support, in providing solutions to pressing societal issues Additionally, a research proposal needs to be devised keeping in mind the purpose for which it is being formulated  Purpose Of Proposal Writing First, a proposal is a plan of action which describes not only the rationale for the kind of work a voluntary organisation intends to do, but also provides the details of the various plans and activities. It also commits the organisation to a particular style of implementing a programme and outlines the overall cost for doing so. Second, the proposal is a basis to attract support from external donors, well wishers, etc. Through this document, the organisation attempts to communicate its own understanding of the kind of work it wants to do and its planning for the same. Third, a proposal becomes a record of plans and programmes for future reference and use. By penning it down on paper, an organisation prepares a record and documentation, which can later be used to study the outcomes, impacts, shifts, changes, etc, which are encountered during the course of work ofa voluntary organisation.  2. Work Focused Proposals 1. Programmatic 3. Clarity Of Activities To Be Expression Clearly Spelt Out Essentials Of A Project Proposal  Pre-Requisites Proposals can either be solicited or unsolicited. Organisations usually respond to the requirements of the solicitation document or Terms of Reference (ToR) based on their capacity to respond to the requirements of the ToR. A. Gather Background Information Before writing a proposal, one needs background documents with respect to the concept of the project, the programme details and the expenses. If the information is not readily available, one has to decide who can help gather different kinds of information. This process makes the actual writing of the proposal much easier. By involving other stakeholders in the process, it helps key people within the organisation seriously consider the project’s value to the organisation. Three kinds of information are usually required to write the proposal: Concept: The project proposal should ideally reflect the overall philosophy and mission of the organisation. The challenge that the proposal is addressing can be obtained from the needs assessment report. In the absence of such a report, a brainstorming session with field staff would be useful to help understand the problem that needs to be addressed. Funders want to be assured of the relevance of the project and that a project reinforces the overall direction of an organisation and the need for the project is really important. Programme: The programme information required includes: – Nature of the project and the manner in which it will be executed – Time plan for the project – Anticipated outcomes and its evaluation – Staffing and volunteer needs, including deployment of existing staff and new hires Expenses: Expenses associated with the project can only be determined when the activity details and timing have been worked out. At this stage, the broad outline of the budget needs to be prepared in order to ensure that the costs are in reasonable proportion to the outcome that is anticipated. If the estimated cost becomes prohibitive, a scaling back of plans may be needed. B. Review The Proposal Solicitation Or Announcement For solicited proposals, the ToR clearly spells out the objectives, the scope of work, specific outputs, schedule of activities and reporting requirements. In cases where the announcement does not provide details, the information gathering options for unsolicited proposals may apply.  Proposal Outline As mentioned earlier, many donors specify their own format and guidelines for preparing a project proposal. Ideally, generic proposals contain two components: (i) Technical proposal: It contains details relating to technical terms of the project. A brief outline of a technical proposal is: INTRODUCTION: This section introduces the project to the funder. It gives the latter a brief idea about the project and what it entails. Essentially, this section consists of a proposal cover letter, title page of the project and a brief project summary in about 300-500 words which captures the essence of the project. PROJECT BACKGROUND: This section provides the context of the project at hand. It describes in about half a page to one page the context of the problem/challenge that needs to be addressed. In other words, it provides an overview of the existing larger problem. This is a kind of introduction which sets the stage for elaborating the goals and activities subsequently. In this section, brief information about the socio-economic, geographical and cultural aspects of the area and the people needs to be provided. GOALS AND OBJECTIVES: A project goal briefly describes the expected changes in the project setting once the project has been implemented. Objectives are a series of accomplishments designed to address the problems. Goals and objectives can be listed both for a long and a short term basis. PROJECT DESCRIPTION (Strategy/Methodology) This section describes in detail the broad categories of activities that an organisation intends to undertake in the project. The purpose of outlining in detail various activities envisaged under the programme is to articulate how an organisation attempts to accomplish the stated goals and objectives. This section elaborates the means and methods through which the organisation intends to pursue those objectives.  Proposal Outline As mentioned earlier, many donors specify their own format and guidelines for preparing a project proposal. Ideally, generic proposals contain two components: (i) Technical proposal: It contains details relating to technical terms of the project. A brief outline of a technical proposal is: EXPECTED OUTCOMES It is useful to elaborate some concrete outcomes that may emerge out of the project planned as above. These outcomes have to be seen in the light of the activities elaborated. The statement of the expected outcomes should become the basis for further evaluation and monitoring of progress in the project. It also acts as a guide to motivate and inspire the members of the organisation. MONITORING & EVALUATION PLAN This section provides an overview of how the project results will be tracked during the implementation phase. It is important to specify in the proposal how the impacts of the ongoing programme will be monitored and evaluated. It is also useful to indicate how this exercise of reflection will be carried out as an in-built component of the programme. A mention can also be made of the different stages of the monitoring process and the various criteria of the latter. WORK PLAN The project work plan details all the activities that are needed to complete the project including the timing of all events. The time frame should specify which activity will be carried out in how much time, in addition to the overall time duration for the totality of all project activities. ORGANISATIONAL CAPABILITY STATEMENT This portion describes the capability of the organisation in terms of skills and experience to conduct related successful projects. It is here that some description of the past history and experience of the organisation proves helpful. The kind of competence and capacity that will be needed to administer and manage this specific project can be elaborated. This section can also become the basis for outlining any collaborative arrangements which are envisaged, and any support or assistance that is sought and is likely to be provided by other individuals and organisations in implementing the project. PROJECT STAFFING The project staffing section of the proposal presents the personnel needed to implement the identified activities. It presents the role and contribution of each member of the project team. For this purpose, CVs of project staff can also be attached. If the project requires additional staff, it needs to be mentioned here.  Proposal Outline (ii) Financial Proposal It contains details relating to financial terms of the project including its budget, staff time and cost, etc (PRIA, 2013). PROJECT BUDGET This section outlines the budget commensurate with the planned activities. There are several different ways of presenting the budget. As a first step in the exercise, it is generally useful to outline the entire budget, and not be limited to the organisation’s external needs. The budget should be a statement of the totality of resources that will be needed to implement the project as per the planned programme. Having done that, subsequently it will identify the resources the organisation already has and ones it can raise from external sources, and then specify the kind of support it expects from the given donor. OTHER CONSTITUENTS OF THE PROPOSAL -Table Of Contents: This helps the reader find his/her way around the proposal. It contains the list of main headings and page numbers. References This lists publications and documents that were referred to in order to write the proposal. ATTACHMENTS Gantt Chart This chart presents the list of activities and the specific period of the year when these activities are going to be carried. MONITORING & EVALUATION MATRIX OR PROJECT LOG FRAME The monitoring and evaluation matrix is an 8-10 column matrix describing the details of the monitoring and evaluation plan. The project log frame details the indicators, means of verification and the hierarchy of project objectives including risks and assumptions. BUDGET SHEETS These present the details of the budget such as the items, cost per items and totals. These items are categorised to show the focus of the project towards addressing the identified problem/s.  Tips for writing a project proposal Here are some tips for writing a project proposal for an NGO: Define the project: Start by clearly defining the project. Identify the problem: Define the problem and present a solution. Outline the solution: Outline your solution and define project deliverables and goals. Develop a budget: Develop a budget and outline your project schedule. Highlight your organization's qualifications: Highlight your organization's qualifications and know your audience. Review and finalize: Review and finalize your proposal. Here are some other tips for writing a project proposal: – Write an executive summary. – Be persuasive. – Include a table of contents. – Make sure the project title is short and descriptive.  Resource Mobilization Resource mobilization may be defined as: A process that involves three integrated concepts, – organizational management and development, – communicating and prospecting, and – relationship building The key concepts are: – Resource mobilization is just a means to the end, the end being the fulfillment of the organization's vision; – Resource mobilization is a team effort, and involves the institution's commitment to resource mobilization; acceptance for the need to raise resources; and institutionalizing resource mobilization priorities, policies and budget allocation; – The responsibility for the resource mobilization effort is shared by the board, the president or the executive director, and the resource mobilization unit; – An organization needs money in order to raise money; and – There are no quick fixes in resource mobilization.  Rationale Behind Resource Mobilisation It is essential to understand the importance and the reason behind the efforts aimed at mobilising resources. Some of the accruing benefits are: Developing Ownership: By contributing their time and resources, citizens, institutions, businesses, and others can assume greater ownership of activities that directly contribute to the positive development of their communities. This sense of ‘ownership’ comes from the pride and accomplishment of knowing that they have done their share to make their community a better place to live in. Building Social Capital: Social capital refers to the value of social networks and the increased willingness of individuals and organisations to help one another as a result of these relationships. By seeking local support, NGOs are more likely to build long-term relationships with other institutions and organisations. These relationships contribute to social networking within the community and provide a better base for future work. Sustainability Mobilising local resources increases the sustainability of community initiatives. As relationships and communication between the NGO and supporters develop, future support is more likely. As members of the community with long-term interests in community projects, local supporters are more likely to continue to support the initiatives, as compared to external donors.  Rationale Behind Resource Mobilisation Independence Raising resources locally also gives an organisation more independence and flexibility to implement activities targeting the needs of the community. Additionally, local support means that an NGO does not have to adjust its programmes to meet the needs and interests of external donors. Implementation Of Field Programmes A voluntary organisation requires resources for implementation of its field programmes, planned activities, etc. These can include running of adult education centres, well digging, creation of alternative irrigation, social forestry, biogas, women’s economic programmes, etc. These are activities which are undertaken by NGOs for implementation of their overall planned programme. Meeting Of Core Expenses Core expenses are expenses required for the day-to-day functioning and running of the organisation itself. These, in most cases, include salaries, particularly of managerial and administrative staff, rent, electricity and water charges, stationery, postage, telephones, conveyance, etc. All in all, it includes all the things that are needed to make the organisation functional on a day-to-day basis, things which need to be done even if a specific project activity is not undertaken on a particular day Long Term Institution Building Certain resources are required for institutional building of an organisation on a long-term basis. Such resources are required for building physical infrastructure and other capital assets. These vary from computers to vehicles to buildings, land, equipment, machinery, etc.  Various types of means/resources Office equipments Regular volunteers Grant Training materials Free consultancy Money of the project Vehicles Consultants Rupees/cash for the Furniture Advisors organization's support Raw materials Membership Physical Human Money goods Resources Office space Trainings Tools Contributions to the program Training facilities Contributions to the Transportation development of the Publication and Printing Organization Support from experts Scholarship Free Service Technical and Facilities Cooperation  (iii) Diaspora (iv) Government philanthropy (ii) Private charitable resources (individuals, (v) Foreign aid religious organisations, (official and charitable trusts and private) foundations, and companies) Categories Of (i) Local Resources (vi) Self-funding community initiatives resources  Resource Providers A. Organizations/Institutions These resource providers assist the organization's programs and as a motivator to the organization provide resource for the local development and development of the community. Because, many of these organizations are motivated to assist community based activities. Such organizations provide resources continuously for social development. The contributions from such organizations will be in the form of project assistance and resources or various tools. International Non-Government Organizations/Institutions (Donor Agencies) International NGOs provide assistance in the form of wealth. They provide assistance to the ongoing program or planning of other projects of the NGO through the bidding process or to the proposed project of the NGO individually or on a partnership basis. B. National Governments National Governments are responsible for essential services like health, education, transportation etc. So, they provide salary, treatment service, transportation and education. They provide grants for special services and are responsible to take approval of the development and policy of the outline of the programs and the working policy. C. Businessmen/Organizations/Private sector They provide assistance in the form of donations in the areas of their liking. It takes time to develop relations for this type of assistance and apart from this, the additional assistance is made from the business point of view. Like: What would they get in return of the assistance? Or how can they benefit from it? D. Individual Individuals may be the possible group of resource partners. They can mobilize assistance by mobilizing the assistance of friends, relatives, colleagues, by taking activities together ahead and by increasing advocacy. They can provide cash, volunteers, goods or services in the form of resources. But even if someone does it for the organization, it is expensive to building personal assistance on a big scale.  Factors that motivate resource providers 1. Politics Receiving votes, spreading the ideology, making decisions for one's interest, asking to keep the name of the party, asking to construct statues of leaders, asking to appoint party cadres, enforce the party's program, publicizing the party, bringing divisions. 2. Social To have one's name, protect image, for employment, for future of son/daughter, or family, to expand relations with various personalities, to wipe out social anomaly, enhance pride, for genuine development, to support, to affect on education, utilize the unused resources. 3. Financial To earn money, make profit, for job, employment, use illegal property, to evade tax, to get tax concessions, t receive interest. 4. Business To evade tax, to get concessions, to make profit, to sell one's products, to earn interest, as a good citizen of the country, realizing one's duty, because there is not many profit. 5. Religious To publicize the religion, to increase followers, to build temples/monasteries etc. 6. Development Because of common thought on development, pity, love, to share experiences, utilize free time, to gain knowledge skills, with pure heart/ spirit, to bring equality. 7. Cultural To increase influence of one's culture, to influence on the food, style of working, to preserve good culture, to wipe out superstition etc. Steps in resource mobilization planning Reviewing the organizational strategic plan for a specific period of time; Listing out priority based programmes for the period; Determining resource mobilization targets which include amount and potential sources; Identifying constituencies and broadening stakeholders; Developing key messages and planning the networking strategies; Reviewing and selecting resource mobilization strategies from planning to implementation; and Gearing up for resource mobilization namely the implementation.  Importance Of Resource Mobilization Some of the importance of resource mobilization include: To diversify and expand resources. Resource Mobilization helps to formulate an independent budget. To break the tradition of running the specific programs of any donor agencies only. To spend in the program of the Organization's liking. To decrease dependency on others. To save oneself/lessen the chance of becoming contractors of foreign donor agencies. For sustainability of the Organization and program. For maximum use of domestic capital and skills. To expand deep relations with the stakeholder and community. To clean the image of the Organization and expand relations. To fulfill responsibilities towards the community. To run programs based on the genuine needs of the community and to advocate for such programs. To disseminate the good practices of the Organization. To develop new thinking and challenge the old traditions. To enhance the dignity of one's Organization.  Principles of Resource Mobilization Resource mobilization should be based on a robust situational analysis Build consensus and collaboration for resource mobilization Resource needs should be prioritized Resource mobilization activities should be meticulously planned Good relationships are the foundation for effective resource mobilization Transparency builds confidence for resource mobilisation Publicizing successes is important for resource mobilization Accountability brings credibility to resource mobilization Maximizing use of resources  Mechanisms of Resource Mobilization The types and mechanisms of Resource Mobilization depend on the type and capacity of the Organization and nature of required resources. Submitting grant proposals: This mentions the response of the request of proposals made by various NGOs, Government, National and International Organizations. Organizing special events: These events are ways of receiving money which will be carried out by NGOs relating to the field or community. These occasions will be held in order to celebrate any special festival. The occasions may or may not be related to the programs. Applying for donations: This type of mechanism of Resource Mobilization requests for donation, fund handover or any precious things from various organizations like cottage industry, Trade and Individuals (both national and international) and private institutions. Publishing the history of the Organization: Publishing good practices and achievements which will have an impact on the Resource Provider. Resource Mobilization is a courageous work. Anyone will not provide resources easily. In this connection, it is said that instead of hoping for anyone giving you resources, you need to fully prepare yourself for receiving resources. Rather than thinking of getting resources by begging for it, resources can be received by selling your Organization's good practices, work, history etc. Expanding relations: There are some sayings in the Resource Mobilization sector, "Resource Mobilization is not only to receive resources but also receive friends.“ The more an Organization expands its relations there will be more resource mobilization. So, it is said that the Organization with a successful resource mobilization receives resources from friends than oneself. Mechanisms of Resource Mobilization Personal meetings: Receiving resource is to receive a friend. Resource Mobilization, you have to hold personal meetings with friends and resource providers, invite them to social occasions and accept their invitation as well. Membership Campaign: Membership campaign is one important mechanism of Resource Mobilization. By increasing its membership, the organization can expand its relations with membership from people with different capacities, and can mobilize every resource with them for the mission of the organization. Partnership: Partnership is another mechanism of Resource Mobilization. Partnership will help exchange the resources between two or more organizations. Specially, if new or small organizations join hands with similar organizations there will be possibility of extensive mobilization of the resources at the local level and international resources. By raising fees: An Organization can raise fees by selling its technical skill, expertise to other organization, like becoming resource person of a training, raising fees from visitors to your Organization for the time given, and raising fees from individuals or organizations coming to your organization for research. Internal Mobilization: Those in possession of mediums like Hall, equipment (photocopy, telephone, fax) etc. can give them on rent and make appropriate use of the available resources. Similarly, many NGO sell their training package while some sell software package in cheap price to other NGOs. Producing audio visual materials: Many NGOs have been carrying out Resource Mobilization by developing information, education and communications materials as per the requirements of other NGOs. Such Organization publish the report, guidelines, posters, leaflets and visual materials for other organizations. Self contribution: The most effective tool of resource mobilization is self contribution. Before collecting resources from other organization, it would be good for every organization to start some work from self-contributions. An organization beginning with self-contribution can win the trust of the resource providers quickly. Mechanisms of Resource Mobilization Details of contribution: Presentation of the detail report of existing contributions (source) and its achievement would be a very effective mechanism of resource mobilization for NGOs mobilizing internal and external resources. NGOs working in a transparent manner with resource providers, targeted group and stakeholders can quickly win the trust of resource providers. NGOs without a detail report of their existing resources and not presenting cannot achieve much comparative success in resource mobilization. So, it would be regarded as an effective mechanism to present to the specified resource provider the details of contribution coming to or made by the NGO. Mobilization of local resource: In the Nepali NGO culture, the tradition of mobilizing resources at the local level is negligible. Looking from the comparative point of view, almost all NGOs depend on external resource. But mobilization of local resources is one effective mechanism of Resource Mobilization. An organization that can extensively use local resources, its relations at the local level would be profound and transparent, as every organization has to be community based for external resource mobilization. Constitution of resource mobilization committee: It would be appropriate for the organization to constitute resource mobilization committee for effective resource mobilization. Office-bearers, stakeholders with experience and expertise in the field should be selected while constituting the resource mobilization committee. By not limiting the resource mobilization committee to the office-bearers and employees of the organization only, skilled people from among the well-wishers, stakeholders and target community of the organization can also be considered. Likewise, renowned personalities at the local level and internationally renowned persons should also be involved in the committee. In this way, constitution of a mixed committee would help the NGO increase its access to resources of all kinds including internal, local and external. It would also help the organization to use the resource in a transparent and sustainable way. Such a committee will prepare a list of the possible resource providers, expand relations and increase access to resources. It will also monitor the right use of the available resources. Program based on the genuine needs of the community: Even if the organization uses all the mechanisms none of the mechanism would be effective if the organization does not formulate and implement programs based on the genuine needs of the community. Likewise, an NGO skilled in resource mobilization is found collecting necessary resources as per the changing circumstances of the community and by advocating on their issues. In this manner, identification of the genuine needs of the community and formulation and implementation of programs accordingly can be taken as a mechanism of resource mobilization, for which the community will become active for resource mobilization rather than the organization and the community will advocate for resource while the organization should also advocate for the real issues of the community. Mechanisms of Resource Mobilization Advocacy Advocacy has been proved an important mechanism among the mechanisms of Resource Mobilization. A farsighted organization skilled in resource mobilization receives resources by advocating on the wish of the donor agencies and their issues of concern. Meeting with those having access to resources Whether formal or informal, a meeting is an important mechanism in the field of resource mobilization but all meetings may not be effective from the resource mobilization point of view if policy makers or those with access to resources are not present. So, a meeting for resource mobilization should also be held with people having access to resources or in the decision making level like executive director, politician, corporation chief, district or department chief, heads of industry/factor and businesses. Formal tea party Personal contact and get-together is an effective mechanism of resource mobilization. The organization looking for resources can host special tea party (reception) for local and external resource providers on the occasion of a special event/festival of the place or country. Such occasions will be of a big help in expanding relations and contact. In such functions, the resource providers should be felicitated or provided small gifts from locally distinguished person. But if such functions are held frequently then their utility will gradually disappear. List of resource providers Institution/NGO requiring resource should prepare a list and address (directory) of the resource providers at the local, regional, national and international level and communicate accordingly. Directory is one proved mechanism of resource mobilization. After preparing the directory or finding an already-prepared directory, e-mail, internet, telephone, fax etc. should be used for formal or informal communication and information about them should be collected, time should be fixed for organizing meetings and exchange the publications of the organization. Case study and success stories Resource Mobilization is a skill to sell one's achievement and commitment towards the future. If the case study of the programs carried out by the organization is distributed to the possible resource provider, stakeholder and community, then the trust towards the organization will increase and also help publicize the organization. Mechanisms of Resource Mobilization Use of Media The world today is a network of information and communications. Media persons and various media work to build this network. For resource mobilization every organization should take the support of the media for all its work including for its achievement, future plans and expansion of relations. In this connection, the NGO should work together with the media in reaching its issues, achievements and plans to the resource providers. There are many examples where the media has not only publicized but also advocated for various programs. Such advocacy from the media will increase the possibility of resource mobilization. So, every NGO should publicize their issues and achievements at the local, regional and national media and as far as possible use media as a friendly power to collect resources. Though the media may not provide cash resource, they can publish for free the case study, success stories, future plan, issues and reports. Apart from this, the media can help collected resources from the Government, stakeholders and donor agencies by repeatedly carrying the issues addressed by an NGO like "rehabilitation of freed kamaiyas". Enhancement of internal capacity Internal capacity building is one important mechanism of resource mobilization. As resource mobilization is a continuous process, it would not be appropriate for any organization to always depend on others for resource mobilization. For resource mobilization, the organization should enhance the capacity of its office-bearers. For appropriate use of available resources, it should also develop internal policy and regulations, committee, subcommittee and all equipments of management. In this context, essential capacity like skills of writing a proposal, expanding relations, auditing and formulating policy and regulations should also be developed internally. Provision of advisors and ambassadors For resource mobilization, people with access to resources or individuals with experience in the sector should be appointed as advisors or ambassadors. Such individuals will facilitate access to resources within and outside the country and help collect resources by advocating the organization. Such individuals may be individual with technical skills (like: proposal writing, expanding of relations) in resource mobilization and also may be people renowned in the national and international level.  Mechanisms of Resource Mobilization Income Generation Among the various mechanisms of resource mobilization, income generation is also one important mechanism. Every organization should adopt every measures for income generation as per the its policy and regulations. Such schemes of local income generation would be sustainable and would to some extent help the organization to stop itself from becoming a parasite. For income generation, the NGO can carry out various activities. The list of some of the possible activities is given below: a) Raising membership fees: Raising membership fee may be helpful only in the initial stages when the organization does not have other means of financial support. Further, the constitution and by-laws of the NGO should specify such provisions. b) Contribution of Employee: Contribution by the employees cannot be prescribed as a regular source of income. Only in certain emergency situations of crises, employees may be requested to make some contribution. c) Technical support fees: Technical support fees can be changed only where the organization have availability of such expertise. d) Equipment/machinery: The NGO can make some income by renting its photocopy machine, Projector, phone, fax, internet, TV, camera, vehicle or other materials like chairs, table, utensils etc. e) Training Hall (Space): NGO can also make income by renting its training hall, hostel etc to any other NGO or organization. Some certain percentage of such income should be allocated as renovation and maintenance expenses while the remaining can be spent for development of the organization. f) Resource Centre: Some NGOs can develop themselves as source training center and sell various trainings. Income can be generated from the participants of such training. For example, VDRC (Gaindakot). g) Study/research Fees: Some NGOs can charge fees to local and foreign students coming for a study in their respective area and also exchange information and expand relations for the study. Possible of such a study is more in indigenous, nationalities NGO and NGOs established in district where large national parks are located. h) Transportation fees: Some NGOs can purchase vehicles on the basis of geographical context and then rent it. Many NGOs rent such vehicles from big travel agencies while some work with vehicles agents in order to generate income. i) Portrait/Video film: Many NGOs purchase paintings from local artists and sell it with some profit. They can also develop video of their programs or development works carried out in the area and sell it within or outside the country. j) Sale of Handicraft: NGOs based in places where handicrafts are produced and sold can be found purchasing such items from the producers and selling it with some profit. In India many NGOs purchase the raw materials for handicraft and produce handicraft after providing training the target community. k) Sale of raw materials: Some NGOs coordinate with local government bodies and sell raw materials available in their sector and make income from it. For example: stones, sand, straw, wood/firewood. Likewise, there is a provision of allocating certain percentage for the NGO in the contract awarded by the local bodies. Mechanisms of Resource Mobilization Constitution of technical committee Constitution of technical committee is also a strong mechanism of resource mobilization. Organizations can develop a committee of its technical employees based in the program, health, education, income generating, construction etc. and of other national and international technical staff and advocate and collect resource for such programs. Expansion of donor agency Expansion of donor agencies is one of the mechanisms of resource mobilization. Resource Mobilization does not only mean to collect resource from any donor for a long time but also to get resources from as many and diverse donors as possible. Resource Mobilization from various kinds of donors will decrease the financial risk. In course of expanding the donor agencies, relations should also be expanded with the local and national level donor agencies and private sector and other organizations. But while expanding the donor agencies, the organization should give equal priority to mobilizing its internal mechanism of resource mobilization. Network building/participation The world today relies on relations, contact and mutual support. Information and communications network has been established. In this context, organizations small or big established in any part of the world cannot isolate itself and if anyone tries to do so, it is almost impossible. Organizations and countries can help one another through such networks. So one of the most important mechanisms of resource mobilization is to build network or participate in the already existing network and exchange information and resources. Addressing the issue of transparency Resource Mobilization is the strategic thinking of the organization which is carried out mostly at the executive level. As it is strategic thinking and plan of the organization it should not be looked at as a different or minor task. Resource mobilization is not only be limited to resource mobilization and use or management of received resources but is directly related to the organization's image and culture. The organization with a transparent, participatory and accountable style of working can expand its relations and contact quickly and everybody would like the activities of the organization. So maintaining transparency in the issues related to the organization is another important mechanism of resource mobilization.  Financial Management When project proposals are submitted and accepted, the next step is the management of funds that these projects bring in. Therefore, it needs to be ensured that resource utilisation and management is effective and efficient, so that adequate support is provided to different programmes and activities. It is important that funds raised are used for the purpose they have been raised for, and in a manner which is both financially appropriate and legally recommended. To achieve this purpose, various voluntary organisations need to engage in several types of systematic activities. Most important among the latter include financial monitoring, planning and management.  Non-Deficit Disclosure Financing Standard Consistency Documentation Integrity Flexibility Principles Of Financial Management Accountability Custodianship  Principles Of Financial Management Accountability In an NGO, the interested parties (donors, governing body, members, beneficiaries and society) want to ensure that the funds of the organisation are being used effectively for the cause for which it was received by the organisation. All these parties are interested in knowing how the funds of the organisation are being used, whether they are being used for pursuing the specified cause or something else, and how effectively these resources are being used. Some of these parties such as government/donors have made such accountability a legal obligation, but for several other constituencies, it is the social and moral obligation of the organisation to be accountable through proper financial management. Integrity The integrity of the organisation has to be unquestionable for proper financial management. Questions on integrity are raised mainly when people feel there has been mismanagement of funds in an organisation. Therefore, those who govern the organisation need to be very cautious about utilisation of funds. Financial management of organisations should reflect the true picture of the physical reality. Any kind of window dressing or understatement of reality in financial systems can raise the question of integrity. If any change in programmes, activities, or expenditure takes place, it should be suitably reflected in the financial records of the organisation. Consistency Financial management of organisations should be consistent over the years. It is undesirable to keep changing systems, procedures, policies, etc, every now and then. Consistency helps in comparative analysis and disclosure of information regarding the organisation’s finances. Inconsistency in financial management systems raises doubts about the intentions of the organisation. The most popular belief is that inconsistency is a sign of manipulation with questionable intentions. Hence, if a change becomes necessary, the change, its effects, and reasons for the same should be clarified.  Principles Of Financial Management Disclosure Any good financial management system should disclose all the necessary information. This is also required as per the law of the land. It is the organisation’s duty to present all the information to the concerned authorities. This authority is vested in a representative of the public; a government representative can enquire about all such activities which have a public stake. Apart from the legal obligation, any other interested party such as donors, members and beneficiaries can at any time ask for disclosure of information, which is their basic right. Non-Deficit Financing A large number of voluntary organisations begin to function without proper planning of their finances. Often, organisations start with some idea of expenditure they need to undertake, but where the funds will come from is left unexplored. Such organisations face problems in salary payments, completion of last phase of work, etc. This is due to the deficit financing5 policy of organisations. Hence, to avoid such obvious problems, organisations should plan their funds on the principle of non-deficit financing. Standard Documentation Any financial management system involves a certain amount of documentation and record keeping. These documents and records should be kept in the standard format for record keeping. For example, in India, the system of record keeping that is generally practiced is the single entry system and the double entry system (details are provided in the forthcoming section). Flexibility Every organisation is different from another in identity and nature. Similarly, financial management systems also vary from one organisation to the other. While every organisation must essentially develop its own financial management system, the latter should not be the same for any two organisations. An organisation, whose activities are primarily of networking, uses a particular system, which suits its needs. The same system should not be used in an organisation which is primarily involved in rural development work, Custodianship Any registered organisation has an independent identity of its own. It entrusts certain responsibilities and roles on the people who govern it. These top officials are custodians of the organisation’s resources and are also accountable for it. They do not own the resources of the organisation, but use them in the interest of the organisation as a whole. Any utilisation of the resources for a wrong purpose or to further one’s own interest is a breach of trust amounting to criminal activity. Components Of Financial Management 3. 1. Account-k Budgeting eeping 2. Monitoring expenditures and income  Components Of Financial Management - 1. Budgeting It is the most important step in financial management. A budget is a financial layout of any planned activity or programme. It involves a system of planning, executing the plan and evaluating performance and financial working of an organisation (Gupta, 2004). Along with this, it specifies how much money an organisation thinks it will bring in and how much will be spent. The various steps involved in budgeting are: Preparation Of A To-Do List : This list pertains to what the organisation wishes to do in a particular period, say one year, the accomplishments it desires to achieve within the same period, and the kind of activities it wants to take up. Estimation Of The Costs Involved : The costs need to be estimated with respect to the heads listed in the list prepared above. The common method of calculating this is using the past year’s report as a guideline. Herein, it is important to note that addition of a percentage increment for inflation is important. While the estimated costs should always be higher than the current rate, the administrative costs increase proportionately as well. Listing Down The Expected Income From Various Sources : Generally, organisations have two sources of income – grants and donations. An organisation may not have the requisite funds for starting a new activity. Therefore, it needs to raise funds either by asking for grants, or by using its surplus from last year. The ideal situation is to first raise the funds and then embark upon the activity, while the surplus funds should be reserved for emergencies. Comparison Of Income With Respect To Expenditure : This comparison facilitates the analysis of activities in light of the funds available. Some activities may also need to be dropped because of shortage of income. Therefore, such analysis helps identify the least important activity, which can then be eliminated. This is also one of the most difficult steps, as dropping a planned activity because of shortage of funds is never easy.  Components Of Financial Management - 2. Monitoring Monitoring is an important step in financial management. Although most organisations do have proper, detailed budgeting systems before starting any activity, many of them do not follow it up with monitoring, and as a result, one of the important purposes of budgeting gets defeated. Monitoring is required for: (i) Monitoring Of Expenditure Monitoring of expenditure is required to understand if the budgeted expenditures are taking place or not, and if those expenditures are as planned, or less, or more than the budgeted amount. Therefore, monitoring helps in analysing any change and ways in which it can be rectified. However, there is no standard formula for monitoring. It is important to note that periodic comparison of the actual expenditures against the budgeted amount gives a fair idea about the expenditure taking place in an organisation. This is done through the Management Information System (MIS). (ii) Monitoring Of Income As an organisation needs to have income to carry out expenditures, therefore, monitoring of income is as essential as monitoring of expenditure. This includes monitoring whether the money needed is coming or not, and if it is less, or more than expected. Often, arrival of funds can be delayed due to reasons such as absence of clearance from donors/banks. Additionally, change in foreign exchange rates results in more or less than the expected money being deposited in the bank. Therefore, proper monitoring helps in taking corrective measures. This can be done if regular comparison between the actual and expected income is made. (iii) Monitoring Of Cash Flows Cash flow is the most critical planning tool in an organisation, which represents its liquidity. It helps in planning and controlling the flow of money. Cash flow analysis: – Shows how much cash will be needed – When it will be needed – Where it will come from The cash flow attempts to budget the cash requirements of an organisation for a given period of time and shows the cash flow in (through grants/donations/interests) and out (through core expenditure/programme expenditure/occasional expenditure) of the organisation. This helps in planning for expenses and prospective investments. Therefore, monitoring of cash flow enables an organisation to take crucial decisions and deal with any potential cash shortage problem. Components Of Financial Management - 3. Account-Keeping Proper and systematic account-keeping is a major statutory requirement in voluntary organisations under the Societies Registration Act, The Trust Act, The Income Tax Act, The Foreign Contribution (Regulation) Act and a host of other legislation in India. It is in this context that maintenance of accounts becomes a necessary aspect of creating, building and strengthening voluntary organisations. Accounting is the system of recording, classifying and summarising all monetary transactions so that the financial position of an organisation can be ascertained on a particular date and in the long run (Gupta, 2004). Additionally, maintenance of proper accounts is also required for reporting to donors. All donors who provide funds and financial support to organisations expect efficient management and utilisation of finances. They are interested in knowing if the money has been utilised the way it was proposed to be utilised. Those organisations which do not provide accurate and timely financial statements get into difficulties and face problems in getting funds in the future. Types Of Accounts : For the sake of convenience, the different types of accounts are mainly divided into three broad categories (Gupta, 2004): – Real Accounts: They represent transactions which deal with material things, such as, fixed assets, cash, stocks, etc. – Personal Accounts: They represent transactions which deal with persons (individuals and companies/firms/societies/trusts, etc.) – Nominal Accounts: They represent transactions which deal with expenses and income of an organisation.  Systems Of Account-Keeping There are two main systems in account-keeping, they are: (i) Single-Entry System It is an old and popular method of account-keeping among small businessmen, traders, etc. In this system, the inflow and outflow of money is recorded in a single account. The best example of this is household accounts, where income is stated and then expenditures are deducted. Herein, the total money spent/received is recorded, but the individual expenditures on certain items are not mentioned. (ii) Double-Entry System In this system, every transaction has two aspects. One is a benefit-receiving aspect or incoming aspect and the other one is benefit-giving aspect or outgoing aspect. The benefit-receiving aspect is said to be a debit and the benefit-giving aspect is said to be a credit. For every transaction, one account has to be debited and another account credited in order to have a complete record of the transaction. Therefore, every transaction affects two accounts in opposite ways. For example, if furniture is purchased in cash, it is a monetary transaction. ‘Furniture’ is the benefit-receiving aspect and hence it is debited. Cash is benefit-giving aspect and hence it is credited. Thus, the basic principle under this system is that for every debit, there must be a corresponding and equal credit and for every credit there must be a corresponding and equal debit.  Steps In Maintaining Accounts The first step is collection of information and its classification. For each transaction, a document (like bill, cash memo, etc) is collected and classified in its ‘debit’ and ‘credit’ aspects for accounting. The second step is the posting of accounts to the books of prime entry, i.e., journal and cash book, with the help of these vouchers. A journal is a book of prime entry, and each transaction is recorded chronologically following the double entry principle. A cash book is meant to record all transactions in which cash/bank receipts and payments are involved. The third step is the posting of accounts from books of prime entry to the respective accounts maintained in a ledger. Here, separate records are maintained for each item like rent, field work expenses, etc. The fourth step comes at the end of the accounting process, where the balance of all accounts maintained in a ledger is extracted and a ‘trial balance’ is prepared. A trial balance is the list of debit and credit accounts (as recorded under the double entry system). the final step in the accounting process, summarised and aggregated information is presented in three statements – receipt and payment account, income and expenditure account and balance sheet. – Receipt and payment account is a statement of total money received and total money paid in a particular period of accounting. It includes both capital and revenue transactions. – Income and expenditure account summarises the total income and total expenditure of the current year. It does not include income of the last year received in this year, or any advance income received for the coming years. – A balance sheet is a statement which presents the picture of the total financial position of an organisation on a particular date of the year (generally end of financial year). It tells us what an organisation owns (assets) at the end of one year, and what it owes (liabilities which have to be paid off).  Types of Income to be exempted Which income will be exempt under section 11 Subject to the provisions of sections 60 to 63, the following incomes of a religious or charitable trust or institution are not included in its total income, provided the above conditions are satisfied: (a) Income from property held under trust wholly for charitable or religious purposes [Section 11(1)(a)]: Income derived from property held under trust wholly for charitable and religious purposes, shall be exempt— ( i) to the extent such income is applied in India for such purpose; and ( ii) where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property; (25% upto assessment year 2002-03). (b) Income from property held under trust which is applied in part only for charitable or religious purposes [Section 11(1)(b)]: Income derived from property held under trust in part only for such purpose, shall be exempt: ( i) to the extent such income is applied in India for such purposes, provided, the trust in question is created before the commencement of Income-tax Act, 1961 i.e. before 1-41962; and ( ii) where any such income is finally set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property (25% upto assessment year 2002-03). (c) Income from property held under trust which is applied for charitable purposes outside India [Section 11(1)(c)]: ( i) Income derived from property held under trust, created on or after 1-4-1952 for charitable purpose which tends to promote international welfare in which India is interested, shall be exempt to the extent to which such income is applied to such purpose outside India. Religious trusts are not covered here. ( ii) Income derived from property held under a trust for charitable or religious purposes, created before 1-4-1952, shall be exempt to the extent to which such income is applied to such purposes outside India. In the above two cases, it is necessary that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income. (d) Voluntary contributions forming part of corpus [Section 11(1)(d)]: Income in the form of voluntary contributions made with a specific direction, that they shall form part of the corpus of the trust or institution, shall be fully exempt. The condition that at least 85%1 of the income should be applied during the previous year in which it is earned is not applicable in this case.  Conditions to Claim Exemption The following are the conditions as provided in section 12A(1) which are to be fulfilled in order to be eligible for applicability of the provisions of sections 11 and 12: The organisation should have been registered under section 12AA/12AB of the Income-tax Act. If the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, then it is required to make an application for fresh registration. Keep and maintain books of account and other documents in such form and manner and at such place, as may be prescribed. Audit report mandatorily needs to be obtained and furnished one month prior to due date of filing the return under section 139(1). (after Finance Act, 2020) Income-tax return has to be furnished for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section [as per section 12A(ba)].  Income subject to application a. Income from trust property shall be computed in a commercial sense and not as per normal computation of income [Cir. No. 5-P(LXX-6) dated 19th June, 1968] b. Exempt income [other than section 10(1), 10(23C) and 10(46)] will not be excluded but shall form part of Income subject to Application. c. Fund raising expenses or expenses incurred to earn income should be deducted while computing the income [charge against income] d. Depreciation will not be considered as charge against income w.e.f. 01/04/2015 (Assessment Year 2015-16) if the asset has been claimed as application. e. Exempt portion of Anonymous donation shall form part of income subject to application.  Application of Income The amount of application for charitable/religious purpose shall include – Revenue & capital nature of application: It is permissible to claim both revenue & capital nature of application provided it is used for charitable/religious purposes. Repayment of Loan: If the expenses are incurred out of loan, then there is no application out of income in the year of expenses being incurred but in such cases repayment of loan shall be considered as application in the year in which loan is repaid. The Finance Act, 2021 provides that an application from loans and borrowings shall not be considered as an application for charitable or religious purposes, However, when such loan or borrowing is repaid from the income of the previous year, such repayment shall be allowed as an application in the previous year in which it is repaid and to the extent, it is repaid. Therefore, application from loans and borrowings shall not be considered as an application for charitable or religious purposes for the purposes of the Third Proviso of Section 10(23C) and clauses (a) and (b) of section 11(1). However, when loan or borrowing is repaid from the previous year’s income, such repayment shall be allowed as an application in the previous year in which it is repaid to the extent of such repayment. Inter charity donation other than towards corpus: Inter charity donation other than towards corpus fund shall be considered as application for the purpose of section 11 of the Income-tax Act, 1961. However, it is to be ensured that inter charity donation are used on similar objects. Hence, inter charity donation can be for specified purposes as per the objects of the donor trust and to the donee trust having similar objects. In case unrestricted or voluntary contribution are given as inter charity donation, then it is desirable that the objects of the donee organisation are also dominantly similar with the donor organisation. Administrative expenses: Administrative expenses are normally related to both earning of income as well as for application of income and therefore, in certain cases, the tax department has taken the view that administrative expenses should be deducted while computing the income instead of treating these expenses as application of income for charitable & religious purpose. However, all the administrative expenses should be allowed as application of income so long as these expenses are not directly attributable to earning income.  Application of Income The amount of application for charitable/religious purpose shall include – Activity outside India: Organisations created before 1-4-1952 can apply income outside India also. Organisations created on or after 1-4-1952 can apply income outside India for charitable purposes which tend to promote international welfare in which India is interested. These organisations will not get exemption unless CBDT specifically permits to work outside India or notifies the purposes which tend to promote international welfare in which India is interested. Specific disallowances of application amount – The amount of application shall be reduced by 30% of the corresponding amount applied for because of non-compliance of TDS provisions or by the full amount if the corresponding payment in excess of ` 10,000 is made in cash. – Inter-charity donation – Corpus grant to other trust registered under section 12AA shall not to be considered as application [w.e.f. A.Y. 2018-19]. Hence, any contribution by a charitable or religious trust registered under section 12AA to any other trust registered under section 12AA, with a specific direction that it shall form part of corpus of recipient trust, shall not be treated as application of income for the donor trust. Corpus Donations: The Finance Act, 2020 also provides that any corpus donation made by trust or institution registered under section 12AA to any fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of section 10(23C) shall not be treated as an application of income. Hence, in view of this amendment by Finance Act, 2020, corpus donation given by a section 12AA registered institution to section 10(23C) approved institution will not be treated as an application of income. Application on Payment Basis: The Finance Act, 2022 inserted an Explanation to Section 11 to explicitly provide that any sum payable by any trust shall be considered an application of income in the previous year in which such sum is actually paid. Thus, the application of income shall be allowed only on a payment basis. This is irrespective of the previous year in which the liability to pay such sum was incurred by such trust according to the method of accounting regularly employed. A proviso to the Explanation further provides that where any sum has been claimed to have been applied by such trust during any previous year, such sum shall not be allowed as an application in any subsequent previous year  Social Audit A social audit is a formal review of a company's endeavors, procedures, and code of conduct regarding social responsibility and the company's impact on society. A social audit is an assessment of how well the company is achieving its goals or benchmarks for social responsibility. It is a process that helps to ensure transparency and accountability in the way organizations operate and interact with the communities and environment in which they operate. Points to be included while attempting to explain Social Accounts.: ✔ Accounting for and evaluating of the impact of corporate social responsibility programmes. ✔ Human Resource Accounting. ✔ Measurement of selected social costs. ✔ Measurement of the full impact of an entity on society. ✔ Social Reporting. ✔ Accounting for public (government) programmes.  Multidirectio Regular. nal. Participatory. Comparative. Comprehensi Verification. ve. Salient Features of Social Multi-Perspec Audit tive/ Disclosure Polyvocal  Salient Features of Social Audit Multi-Perspective/Polyvocal. Aims to reflect the views (voices) of all those people (stakeholders) involved with or affected by the organisation/department/programme. Comprehensive. Aims to (eventually) report on all aspects of the organisation’s work and performance. Participatory. Encourages participation of stakeholders and sharing of their values. Multidirectional. Stakeholders share and give feedback on multiple aspects. Regular. Aims to produce social accounts on a regular basis so that the concept and the practice become embedded in the culture of the organisation covering all the activities. Comparative. Provides a means, whereby, the organisation can compare its own performance each year and against appropriate external norms or benchmarks; and provide for comparisons with organisations doing similar work and reporting in similar fashion. Verification. Ensures that the social accounts are audited by a suitably experienced person or agency with no vested interest in the organisation. Disclosure. Ensures that the audited accounts are disclosed to stakeholders and the wider community in the interests of accountability and transparency.  Proper Prioritization utilization of funds Conformity of of the developmental developmental activities as activity with per stated goals requirements Accurate Objectives identification Quality of of of Social Service requirements Audit  State should An active be and accountable empowered to the civil civil society society State should Congenial have faith in Prerequisites political and participatory for carrying policy democracy out a Social environment Audit  Types of Social Audit 1. Social Process Audit: It tries to measure the effectiveness of those activities of the organization which are largely taken up to meet certain social objectives. Corporate executives in this case try to examine what they are doing and how they are doing. The method involves four steps: i. Find circumstances leading to the starting of the social audit programme ii. List out goals of the social programme iii. State how the organization is going to meet such goals iv. Qualitatively evaluate what is actually done as against what has been planned 2. Financial Statements Format Social Audit: In this type, financial statements show conventional financial information plus information regarding social activities. About associates a management consultancy firm proposed that the balance sheet should show a list of social assets on one side and social commitments, liabilities and equity on other side. The income statement should reveal social benefits , social costs and the net social income provided by the company operations to the staff community, general public and clients. This approach has been criticized as many feel that it may create confusion of complicating issues further and defying easy understanding. 3. Macro-Micro Social Indicator Audit: This type of audit requires evaluation of a company’s performance in terms of social measures ( micro indicators) against macro social measures. The macro social factors include the social goals expected by society in terms of health, safety, education, housing, accidents, pollution control measures, etc. The micro social indicators are measures of the performance of the company in those areas measured by macro social indicators. 4. Social Performance Audit: In developed countries, several interests groups including church groups, universities, mutual funds, consumer activists regularly measure, evaluate and rank socially responsive companies on the basis of their social performance. Regular opinion polls are carried out to find companies that initiate social efforts in a proactive manner and earn the goodwill of the general public.  Types of Social Audit 5) Partial Social Audit: In this case, the company undertakes to measure a specific aspect of its social performance ( e.g. environment, energy, human resources) because it considers that aspect to be very important or because its social efforts for the time being are confined to the area: Environmental Audit: In developed countries people protest violently if the companies try to pollute the environment and the companies not only comply with regulations but also proactively explore opportunities to recycle wastes into useful products. An internal group constituted by the unit concerned prepares a report about the way the environmental issues of importance are being taken care of. This report is generally re-examined by an outside auditor to see whether air/ water pollution measures, release of toxic wastes, safety regulations have been complied with or not. Energy Audit: to conserve energy sources, energy audits are undertaken to investigate how energy is obtained, consumed and preserved. Human Resource Accounting (HRA): The basic philosophy of HRA is that human resources are assets and that the investment in acquiring, training, and developing these resources should be accounted for as an asset. Conventional accounting methods write off investments in human capabilities and values as operating expenses and thereby understate the profit. The current value of a company’s human assets is not considered while computing expenses/revenues and, as a result, the balance sheet does not portray the true and fair picture of the company’s state of affairs. 6) Comprehensive Audit: It tries to measure, verify and evaluate the total performance of the organization including its social responsibility activities. It focuses mainly on management systems rather than on the actions or events which are not so important. It aims at evaluating the quality of processes and the information on which organizational decisions are taken.  Quality of Work Life Equal Consumerism opportunity Social Environmental Ethical Issues Audit Protection Scope  Social Audit Scope 1. Ethical Issues: They offer a basis for determining what is right and what is wrong in terms of a given situation. Ethics is best understood when we cite examples relating to unethical conduct. Few such examples can be price discrimination, unfair trade practices, cheating customers, pirating employees’ ideas, leaving the job without observing job contract. 2. Equal opportunity: A second relevant social issue which comes under social audit is the equity of treatment in employment and a fair justice system in the organization. Employment decisions in an organization should be based on merit and ability and not on the basis of arbitrary quotas based on gender, race or religion. 3. Quality of Work Life: Besides demands for safe, healthy and human work environment people are seeking greater meaning in their lives. Greater responsibility, growth, freedom and flexibility, fair reward system are few things which employees have preference for. There is also a growing demand for employee assistance programmes keeping in mind the present day stressful situations they are exposed to. 4. Consumerism: Business has a special obligation towards the consumer as the business exists to serve and satisfy the needs of the consumers. It is the principal duty of business to make available to the consumer items of daily needs in the right quantity at a right time, price and of the right quality. However many Indian products are not safe at all and the consumers suffer at hands of corrupt, and dishonest corporate houses. 5. Environmental Protection: Growing water, air and environmental pollution by various industries in recent times has led to a public outcry demanding ‘environmental protection’ at any cost.  A Key Ingredient in Social Audits A key ingredient in social audits is accountability. accountability is the cornerstone of any transparent and responsible system. When it comes to social audits, a company or organization needs to be accountable for the actions it takes and the decisions it makes. 1. Accountability promotes transparency. When a company is accountable for its actions, it is more likely to be transparent about what it is doing and why. This means that stakeholders, including customers, employees, and investors, can better understand the company's operations and make informed decisions about whether to support it. 2. Accountability builds trust. When a company is accountable for its actions, it sends a message to stakeholders that it is committed to doing the right thing. This builds trust and can help to enhance the company's reputation. 3. Accountability encourages continuous improvement. When a company is held accountable for its actions, it is more likely to identify areas where it can improve. This can lead to more sustainable and socially responsible practices over time. 4. Accountability can lead to legal consequences. When a company is not accountable for its actions, it may face legal consequences such as fines or lawsuits. This can be costly and damaging to the company's reputation.  How to conduct a social audit 1. Preparatory groundwork Define the scope of the audit, (e.g., the specific service, organization, program, project, component, or activity to be examined). Form a committee or working group to implement and oversee the social audit. Identify key stakeholders (intended users, community members, local civil society organizations, service providers, responsible government officials, employees, contractors, volunteers, donors, etc.) Develop a clear understanding of relevant administrative structures and pinpoint key responsible agencies/actors. Develop a clear understanding of the vision and objectives of the service/project in question. Develop performance indicators through stakeholder consultation. Consider requesting specialized assistance to plan your information-gathering channels (including sampling, development of questionnaires) and how you will analyze and use the data collected. Organize a public awareness campaign about the aims and benefits of the  How to conduct a social audit 2. Investigation and analysis Access relevant public documents (such as accounting records, cash books, payroll, bills, technical project reports, and managerial records). The Right to Information Act (if enacted in your country) can be used for this purpose. Gather qualitative data from relevant stakeholders about their perceptions and experiences of the service/project in question (e.g., using surveys, focus group discussions, community meetings, etc.). Collect qualitative and quantitative data through household questionnaires; community profile questionnaires that focus on the use, experience, and perception of public services; published and available administrative data; interviews with elected representatives and service providers; and focus group discussions. Analyze the collected data (specialized assistance may be needed). 3. Public disclosure and evidence-based dialogue Develop a communication strategy to disseminate findings and outcomes (using the media, public meetings, and postings, etc.). Convene meetings with community members to discuss findings and propose changes and solutions. Convene public meetings with public authorities/service providers to allow community members to discuss the evidence, and to plan and implement changes. 4. Follow-up Where necessary, use findings to address specific instances of mismanagement and corruption, as well as broader policy considerations. Train and support community members and service providers to undertake future  Principles of social audit Transparency: Complete transparency in the process of administration and decision making, with an obligation on the govt. to proactively give the people full access to all relevant information. Participation: A right based entitlement of all the affected persons and not just their representatives to participate in the process of decision making and validation Representative Participation: In those cases where options are pre-determined out of necessity, the right of the affected persons to give informed consent, as a group or as individuals, as appropriate Accountability: Immediate and public answerability of elected representatives and government functionaries, to all the concerned and affected people, on relevant actions or inactions.  Reasons for Social Audit 1. Promoting Transparency and accountability Social audits promote transparency and accountability in the way organizations operate. By reviewing an organization's social and environmental performance, social audits help to identify areas where the organization is falling short and where improvements are needed. This information can then be used to hold the organization accountable for its actions and to promote transparency. 2. Building Trust with Stakeholders Social audits help to build trust with stakeholders, including employees, customers, investors, and communities. By demonstrating a commitment to social and environmental responsibility, organizations can build a positive reputation and earn the trust of their stakeholders. This can lead to increased loyalty, improved brand reputation, and a stronger bottom line. 3. identifying Areas of improvement Social audits help to identify areas of improvement in an organization's social and environmental performance. By reviewing policies, practices, and impacts, social audits can uncover areas where the organization is falling short and where improvements are needed. For example, a social audit might uncover a lack of diversity in an organization's workforce or a failure to properly dispose of hazardous waste. 4. Encouraging Continuous Improvement Social audits encourage continuous improvement in an organization's social and environmental performance. By identifying areas of improvement, social audits provide a roadmap for organizations to follow as they work to improve their performance. This can lead to ongoing improvements in the way organizations operate and interact with their stakeholders.  Social Audit as An Input To monitor the social and ethical impact and performance of the organisation; To provide a basis for shaping management strategy in a socially responsible and accountable way, and to design strategies; To facilitate organisational learning on how to improve social performance; To facilitate the strategic management of institutions (including concern for their influence and social impact on organisations and communities); To inform the community, public, other organisations and institutions in the allocations of their resources (time and money) this refers to issues of accountability, ethics (e.g., ethical investment), etc.  Advantages of Social Audit Ensuring that the implementation of projects and programs is transparent, enabling community members to identify, control, and report irregularities. Generating information that is perceived to be evidence-based, accurate, and impartial. Raising awareness among beneficiaries and local service providers about public projects or services. Assessing the impact of projects and preventing the abuse of funds and corruption. Strengthening community empowerment through participation in the process. Improving citizens’ access to public information and serving as a valuable tool for exposing corruption and mismanagement. Increasing social audit committee members’ basic understanding of project finance and procurement. Promoting collective decision-making and shared responsibilities. They allow stakeholders to better influence the government’s behavior and monitor progress.  Challenges of Social Audit Requires substantial technical support, especially in obtaining and analyzing data. Access to public records is crucial and obtaining records may often depend on political willingness. The Right to Information laws should be used to access copies of public records in such cases. In some cases, the absence of accurate and updated public records is a problem. Public service providers and policymakers may feel threatened by the social audit process. It is prudent to foresee the need for conflict management and to remind all participants that the primary goal is not to blame, but to bring about improvements.  Vouching Vouching is a technique used by auditors to verify the accuracy of transactions recorded in a company's books of account. Vouching involves reviewing documentary evidence to see if it supports the entries made in the accounting records. Vouching is the process of providing assurance or support for something or someone. It can be used in a variety of contexts, such as financial audits, business partnerships, and personal relationships. The idea behind vouching is that the person or entity providing the assurance has knowledge and credibility, and their endorsement carries weight. Vouchers are of two types: – Primary Vouchers: The bills or the documents that are available in the original copy are known as primary vouchers. – Collateral vouchers: These are the bills which are available in a duplicate copy.  Examples of vouchers Cash receipts: Counterfoils of receipts issued, carbon copies of receipts, contracts, correspondence and letters from debtors confirming the balance of their accounts. Cash payments: Original receipts from the payees, invoices, cash memos, bills, demand notes, salary books, wage sheets, contracts etc. Purchases: Invoices, goods inward book, copies of orders sent, cash memos, bought notes, correspondence etc. Sales: Copies of invoices, copies of orders received, cash memos, sold notes, goods outward book etc. Others: Debit notes, and credit notes, minute books of meetings of directors or share holders.  Objectives of Vouching To ensure recording of all transactions. To verify that all transactions recorded in the books of accounts are supported by a documentary evidence. To verify the validity of the vouchers which support the entries and to ascertain whether these are authentic, addressed to the business and properly dated. To verify that no fraud or error has been committed while recording the transactions in the books of accounts. To ensure that all the transactions took place during the financial year for the business purpose only (not for personal use), and are appropriately recorded in the books of accounts with true and fair evidences. To make sure that financial records are prepared in a lawful manner  Advantages of Vouching Vouching is an important tool for providing assurance of the accuracy and reliability of financial statements. By independently verifying the evidence supporting transactions and account balances, vouching helps to ensure that the financial statements accurately reflect the financial position and performance of the organization. One of the key advantages of vouching is its ability to help detect and prevent fraud. By verifying the authenticity and validity of financial transactions and account balances, vouching can help to identify and flag any suspicious or irregular activity. Vouching also helps to increase the credibility and integrity of financial statements. By independently verifying the evidence supporting transactions and account balances, vouching helps to ensure that the financial statements are accurate, reliable, and free from material misstatement. Vouching also enhances the confidence of stakeholders in the financial information provided by the organization. By providing assurance that the financial statements are accurate and reliable, vouching helps to build trust in the organization and its financial reporting. Another advantage of vouching is that it facilitates compliance with legal and regulatory requirements. Many laws and regulations require that financial statements be independently verified and audited, and vouching is an important tool for meeting these requirements. Finally, vouching enhances the effectiveness and efficiency of internal controls. By independently verifying the evidence supporting transactions and account balances, vouching helps to ensure that internal controls are functioning as intended and that any issues are identified and addressed in a timely manner.  Role of Vouching The role of vouching can be summarized as follows: Vouching involves the detailed examination of individual transactions and their supporting documents, such as invoices, receipts, contracts, and agreements. By tracing transactions from accounting books to source documents, vouching verifies the authenticity, occurrence, and compliance of transactions. Vouching helps in identifying any errors, misstatements, or irregularities in the recorded transactions, ensuring they are accurately represented in the financial statements. Through vouching, auditors can assess the adequacy of internal controls and adherence to relevant policies and regulations.  Verification Verification is a process to substantiate the validity of assets and liabilities appearing in the Balance Sheet. Verification of assets and liabilities is a process in auditing that involves checking the existence, ownership, valuation, and disclosure of an organization's assets and liabilities. Verification is an important step in the design and development process, as it helps to identify and correct any issues before the product is released to the public. Thus, verification includes verifying the following : – The existence of the assets and liabilities. – Legal ownership and possession of the assets – Correct valuation, and – Ascertaining that the asset is free from any charge. Types of Verifications- – Offsite verification means verification by checking documents, official records, photos and by questioning staff responsible or otherwise trusted to be a reliable source for the facility in verification. – Onsite verification means the verifying party is physically visiting the facility, getting introduced into due facts about it on the site where the facility is located and operated. The process may be regulated by law in certain countries.  Objective of Verification To show the correct value of assets and liabilities. To know whether the Balance Sheet exhibits a true and fair view of the state of affairs of the business. To find out the ownership, possession and title of the assets appearing in the Balance Sheet. To find out whether assets are in existence. To detect frauds and errors, if any while recording assets in the books of the concern. To find out whether there is an adequate internal control regarding acquisition, utilization and disposal of assets. To verify the arithmetic accuracy of the accounts. To ensure that the assets have been properly recorded  Advantages of Verification Ensures accuracy: Verification processes help to ensure that the information provided is accurate and correct, reducing the likelihood of errors and mistakes. Increases security: Verification measures, such as password protection or biometric identification, can increase the security of systems and protect against unauthorized access. Enhances credibility: By verifying information, the credibility of the information and the source is increased, making it more reliable and trustworthy. Facilitates compliance: Verification procedures can help organizations comply with legal and regulatory requirements, such as know-your-customer (KYC) and anti-money laundering (AML) regulations. Improves efficiency: Verification can improve the efficiency of processes by reducing the need for manual checks and providing automated validation of information.  Role of Verification 1. Showing the Actual Financial Position: Balance Sheet is prepared to show the actual financial position of a business. If proper valuation is not made, such Balance Sheet does not provide true and fair information. 2. Ascertaining the Real Position of Profit or Loss: Depreciation and other expenses on assets will be incorrect if proper valuation of assets is not made. So, to calculate the actual amount of profit or loss, proper valuation of assets and liabilities is necessary. 3. Increase Goodwill: Proper valuation gives fair information about profitability and financial position of a business. So, people can get information which creates positive attitude towards company. 4. Assures Safe Investment to Shareholders: Verification and valuation provide actual information about assets and liabilities to the shareholders which assure safety of their investment. 5. Easy for Sale: At the time of sale of the company, it can be sold at the price which is enlisted in the Balance Sheet, but the assets whose valuation is not made need valuation before selling the company. 6. Easy to Get Loan: Companies disclose the Balance Sheet proved by auditor for public knowledge which increases the trust of the company. Hence, companies can easily obtain loan from financial Institutions. 7. Easy to Get Compensation: Whenever the loss occurs due to any incident, insurance company provides compensation on the basis of valuation of assets. So, the company can easily get compensation.  Auditor’s Duty Regarding Verification Legal Ensuring the Ensuring that Ensuring the Acquiring the ownership proper the assets existence of assets for and valuation of are free from assets. business possession of assets. any charge. the assets. Similarities between Vouching and Verification Both vouching and verification involve checking the accuracy of the information or the validity of a claim. In both cases, a third party is responsible for assessing the credibility of the information or claim. Vouching and verification both require the use of evidence or documentation to support the validity of the information or claim. Both vouching and verification are used to reduce the risk of fraud or errors in financial reporting. Both vouching and verification can be used in internal and external audits. Both vouching and verification require the use of professional judgment. Both vouching and verification are important for maintaining the integrity of financial reporting and safeguarding the interests of stakeholders.  Difference between Vouching and Verification BASIS FOR VOUCHING VERIFICATION COMPARISON Vouching means checking the Verification means a process to accuracy of the transactions substantiate the validity of assets Meaning recorded in the books of and liabilities appearing in the accounts. Balance Sheet. Documentary Evidence Observation and Documentary Basis Evidence Examination of Items of Profit & Loss account Items of Balance Sheet Audit clerks Auditor Carried out by Time Horizon Year-round At the end of the financial year. To examine the correctness, To confirm the ownership, Objective validity and completeness of possession, existence, valuation the transactions. and disclosure of the items appearing on the Balance Sheet Unit IV- END