Every charitable institution or NGO registered for social and welfare activities is required to get their accounts audited to ensure transparency, compliance, and accountability in financial management. The audit checks whether donations and grants are used properly and only for the declared objectives of the organization.
As per Section 12A of the Income Tax Act, if a charitable trust or institution is registered under this section and its total income exceeds the non-taxable limit (before claiming exemption), it must undergo an audit by a chartered accountant. The audit ensures that: