MHA orders forensic audit of Ahmedabad NGO's books for 3 years

Mumbai: In a rare move, the ministry of home affairs (MHA) has directed a forensic audit of Give Foundation, a non-profit organisation having its registered office in Ahmedabad.

Chartered accountant firm Borkar & Muzumdar has been authorised to examine the accounts and records for receipts and utilisation of foreign contribution for 2019-20, 2020-21, and 2021-22, a person aware of the decision told ET.

It is unclear what triggered the audit which has been directed under section 20 and 23 and the Foreign Contribution (Regulation) Act. Section 20 of the Act can be invoked if persons in question fail to share information in time, or if the information provided is not in accordance with the law or if the government thinks that there is a contravention of the law.


According to the website of GiveIndia (registered as Give Foundation), the organisation "exists to alleviate poverty by delivering impactful social initiatives" and "enables individuals and institutions to donate funds to chosen causes..."

Give Foundation director Atul Satija did not respond to ET's email sent on Wednesday. Email and WhatsApp to the MHA spokesman also went unanswered till the time of going to press.

Borkar & Muzumdar has asked various vendors of Give Foundation to share information like total expenses, agreement, work order, persons who introduced it to the Foundation, and invoice copies. A few vendors, sources said, are reluctant to share the information as they believe that unlike the Income Act law, which allows tax officials to approach multiple parties to verify information, an investigation under FCRA should be confined to the organisation that is being audited.

"This is certainly unusual. Under FCRA, when there's suspicion of violation, such as misuse of foreign contributions or failure to comply with FCRA provisions, the MHA can initiate inquiries. But invoking Section 20 (power to call for information) and Section 23 (inspection of accounts) together, and authorizing a CA firm to conduct a forensic audit, is not common practice. This suggests the MHA is looking for a detailed and specialized professional review," said Isha Sekhri, partner at Isha Sekhri Advisory LLP, which deals with FCRA and FEMA matters.

"Such audits," said Sekhri, "can be initiated suo motu by the MHA, but also based on complaints received from third parties. This move could either point to a violation of the Act, or transactions raising concerns, or a shift in how the MHA is handling certain high-profile or sensitive FCRA cases."

The government has been taking a close look at the foreign donors and fund end-use of NGOs. In tracking inflows and curbing transfers from other banks, all NGOs maintain accounts with a particular New Delhi branch of State Bank of India for receiving foreign donations. Once a foreign donor is included in the 'Prior Reference Category' list (or, watchlist), the bank takes the MHA clearance before crediting the amount.

The FCRA has been tightened over the years with the last round of restrictions introduced in 2020. A contentious amendment in September 2020 stopped larger NGOs distributing foreign contributions to smaller non-profits covering the last mile. The regulation, say NGO officials, has hurt smaller NGOs in remote areas. The law was changed amid allegations that some were misusing foreign donations. The statute originated in the Emergency era. It was aimed at countering foreign schemes that tried to undermine political and parliamentary institutions.