When undertaking a Corporate Social Responsibility project, there is a process of reviewing the financial and operational performance of the Non-Governmental Organization (NGO) that you partner with.
Periodical NGO audits assess the organisation's financial health, governance structure, and program effectiveness. It is a means to identify areas for improvement in ongoing CSR programs. These audits are an important tool for ensuring the transparency, accountability, and effectiveness of partner NGOs.
When an NGO undergoes an audit sponsored by a CSR department, the impact made by the NGO on a higher level is assessed in a more holistic manner. This promotes the development of a more sustainable and inclusive society, which is the ultimate goal of successful CSR.
During an NGO audit the independent auditor reviews the organisation's records and evaluates its compliance with applicable laws and regulations. This auditor assesses the competency of the organisation's internal controls and risk management practices.
In addition to financial auditing, NGO audits may also include program evaluations. It involves assessing the effectiveness of the NGO's programs in achieving their intended social and environmental outcomes. Program evaluation may involve various methods, such as surveys, interviews, and site visits.
Solace’s unique project management platform conducts these audits by connecting with the NGO directly. Following a detailed discussion, a customised assessment approach gets created. It allows us to collate all vital information and make it easily accessible at key points during your CSR journey.
Besides being a crucial part of Impact Auditing that has become mandatory since the 2021 Amendments, NGO audits are key for a smoothly run CSR program.
Here are some of the benefits of NGO audits for CSR:
Due Diligence: Conducting NGO audits helps CSR programs to conduct due diligence before investing in them. By assessing the performance and credibility of NGOs, CSR programs can ensure investments are well-placed and aligned with the stakeholders’ values and priorities.
Risk Management: NGO audits help CSR program leaders to identify and manage the risks associated with their project investments. It happens by assessing their financial and operational sustainability. By doing so, organisations minimise their risk of fraud, mismanagement, and reputational damage.
Transparency & Accountability: Audits help to promote straightforwardness in all activities. By assessing their partner NGOs, organisations can ensure that all CSR investments get used effectively and efficiently to help benefit the intended individuals and communities.
Impact Assessment: NGO audits help CSR programs to assess the impact in both a qualitative and quantitative way, taking into account experiences on the ground level. By evaluating the outcomes and impact of NGO programs, CSR programs can measure the value created by their investments and use this information to refine their strategies and programs.
Improved Partnerships: These audits help to build stronger partnerships between organisations conducting CSR projects and NGOs. By working closely together to engage in regular auditing, CSR programs can build trust, foster collaboration, and support the development of better programs.
An NGO audit report is a document usually prepared by an independent auditor who has evaluated the financial and operational performance of the NGO. The findings of an NGO audit typically include recommendations for improvement. The NGO can use the report to fine-tune its operations and governance. This document finds use when reporting to the NGO's stakeholders, donors, government agencies, and the public.
The report must include a description of the scope of the audit, the methods used, and the criteria for evaluation. It also provides an assessment of the NGO's financial health, governance structure, and program effectiveness, as well as an evaluation of the NGO's compliance with applicable laws and regulations.
The NGO audit report should also review and identify potential areas of risk and recommend improvements to the NGOs policies and procedures, keeping up with changes in legislation.
This document helps formally illustrate an NGOs scope of work. It not only demonstrates credibility but also where further attention is required. It helps attract further support and funding to the causes people focus on.
A successful NGO audit not only allows investing organisations to breathe a sigh of relief but should also act as a feather in the cap of all those involved with the programs conducted at any given point. That is why businesses should always actively engage auditors in NGO assessment at regular intervals.
SoulAce is a one-stop solution for all your CSR requirements. With over a decade of experience in the Social Development sector, we are well-equipped with the right teams and software to help systematically conduct your NGO audits. Imagine all your analytics available at the click of a button - as and when you require them. Keep on top of compliances and keep your CSR activities transparent, all with our Technology for Good.