New Delhi -The Ministry of Corporate Affairs (MCA) is working towards making Corporate Social Responsibility (CSR) spending more accountable by introducing the auditor’s view on CSR spending as part of the auditor report, DNA reported.
The ministry plans to bring CSR spending within the purview of a statutory financial audit by making details of CSR expenditure part of the financial statement of a company.
The government is also reconsidering its 3 year jail term provision on CSR spending and may make it a civil offence.
The CSR provisions under section 135 of the Companies Act, 2013 mandate that the companies with a net worth of Rs 500 crore or more or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more will have to spend at least 2% of their average net profits earned during three immediately preceding years.
Analysis of data reveals that companies with annual CSR spending of Rs 5 crore or more account for about 65% of the total prescribed amount every year.
The inclusion of details of CSR spending in the financial statement and enhancement of disclosures will make the CSR substructure transparent and robust.