an initiative of FMSF & CPA



Maintenance of Books of Account

FCRA 2010 and FCRR, 2011 do not prescribe any specific method of accounting. Therefore, any legally consistent and otherwise acceptable method of accounting can be used for maintaining books of account for FCRA purposes.

Method of Accounting

Section 19 of the FCRA 2010 provides that proper books of account with regard to FC receipt and utilisation should be maintained. In the past, it was assumed that FCRA required cash basis of reporting (if not accounting). Further Rule 11 of FCRR 2011 provides that separate books of account and records should be maintained exclusively for foreign contribution received and utilised.

Earlier, filing of Income and Expenditure account was not necessary which implied that FCRA reporting was strictly on cash basis. However, with the inclusion of Income and Expenditure account it is clear that under FCRA 2010 both accounting and reporting need not necessarily be on cash basis.

As per the requirement of FC-4 statement, the foreign contribution should be reported on cash basis as far as receipts are concerned and the utilisation should be reported based on the method of accounting followed.

Preservation of Books of Accounts

FCRR 2011 provides that the financial statements should be preserved upto six years. This provision is a great relief to the various organisations as in the old Act, the power to call for information and statements was not defined. Now the organisations should preserve financial statement and records thereof for six years only.


The proforma of the certificate to be given by the chartered accountant is provided in Form FC-4. On the basis of the relevant books and vouchers, the chartered accountant is required to certify the following:
1. the brought forward balance of the foreign contribution at the beginning of the year.
2. the foreign contribution received during the year
3. the unutilized balance of foreign contribution at the end of the year
4. certify that the association has maintained the account of foreign contribution and records relating thereto in the manner specified in the Foreign Contribution (Regulation) Act, 2010.
5. the information furnished in the certificate and in the enclosed balance sheet , income & expenditure statement and statement of receipt and payment are correct.

According to the FCRA Amendment Rules, 2015, FCRA annual returns needs to be filed online in FormFC-4. Now, it has become mandatory to file online returns at the FCRA website which should be digitally signed or e-signed by the chief functionary alongwith the following documents

SI. No Document Name Maximum Size Limit of PDF document
1. Duly signed and seal Charted Accountant Certificate(with C.A registration number). 1 MB
2. Declaration Certificate of Chief Functionary. 1 MB
3. Audited Statement of Accounts(It should contain Payment Account, Income and Expenditure Statement, and Balance Sheet). 50 MB
4. Statement of Account from Bank duly certified by the officer of such bank. 10 MB

Further, the annual returns should be authenticated by the signature of the chief functionary and seal of the association with the following specifications

SI. No Instruction for Images
1. Image Dimension of Signature should be 140(Width) * 60(Hight) Pixel only.
2. Ensure that the size of the scanned signature image is not more than 50 KB.
3. Image Dimension of Seal of Association should be 140(Width) * 60(Hight) Pixel only.
4. Ensure that the size of the scanned image of Seal of Association is not more than 100 KB.

A nil return is required to be filed annually. However, documents such as certificate from Chartered Accountant and financial statements would not be required to be uploaded.

Declaration and authentication

The Term “Chief Functionary” has not been defined in the FCRA Act or Rules. Normally the head of the organisation should be construed as the Chief Functionary. The organisation may also designate any office bearer as the Chief Functionary through a General Body/Governing Body resolution, for the purposes of filing the FCRA returns, Forms etc.


4.5.1 Further, on quarterly basis all persons / organizations who have been granted registration or prior permission shall have to upload their financial information pertaining to the donor and the detail of grants received. Such information should be uploaded on their website or on the website as may be specified by the Central Government. It may be noted that the amended rule does not provide any relaxation to smaller NGOs.

After the amended law, all organizations without any financial limit shall have to upload financial information in their website or fill the requisite Form at the FCRA website. The information to be uploaded include :

(i) Detail of the donors
(ii) Amount received
(iii) The date of receipt.

The information should be uploaded within 15 days following the last day of the quarter in which the funds were received.

It may be noted that all the organizations have to upload 1st quarter financial information ( i.e for the period from October,15 to December,15) by 15th of January, 2016.

Delay in Filing FC-4

FCRA was previously silent about consequences for delay in filing FC-6. However, recently, the department has issued a notice about the penalties involved with respect to delay in Filing of FCRA Annual returns. Also, the department has specified the various authorities for compounding of such offence.

Audit by Central Government

The Central government has a right to appoint a “Group A” gazetted officer to audit the accounts of an association or organisation. The relevant sections in this regard is reproduced as under —

Section 20

“ Where any person who has been granted a certificate or given prior permission, fails to furnish any intimation under this Act within the time specified thereof or the intimation so furnished is not in accordance with law or if, after inspection of such intimation, the Central Government has any reasonable cause to believe that any provision of this Act has been, or is being, contravened, the Central Government may, by general or special order, authorise such gazetted officer, holding a Group A post under the Central Government or any other officer or authority or organisation, as it may think fit, to audit any books of account kept or maintained by such person and thereupon every such officer shall have the right to enter in or upon any premises at any reasonable hour, before sunset and after sunrise, for the purpose of auditing the said books of account:
Provided that any information obtained from such audit shall be kept confidential and shall not be disclosed except for the purposes of this Act.