CA Inter P5 · Chapter 9 · Question 7 of 12
Akshar Foundation, an NGO, receives a grant from a donor agency to be used exclusively for a rural literacy project. The auditor's key concern regarding this grant is to verify that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The grant has been utilised for the specified purpose in accordance with the grant conditions and is accounted for separately
Explanation
Restricted grants must be used only for the purposes and under the conditions specified by the donor. The auditor examines the grant agreement, separate accounting for restricted funds, utilisation certificates and supporting documents for expenditure. Treating restricted funds as general income or diverting them would breach the conditions.
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