Central Audit Bureau to Review Large Section 8 Accounts

In a decisive move to enhance financial oversight in the non-profit sector, the Government of India has authorized the Central Audit Bureau (CAB) to conduct in-depth reviews of large Section 8 company accounts. This initiative, rolled out by the Ministry of Corporate Affairs (MCA), targets organizations with high annual receipts, significant CSR fund inflows, or foreign contributions, ensuring greater accountability and adherence to financial norms.

The CAB will now be empowered to conduct randomized and risk-based audits of Section 8 companies whose operations cross specified thresholds—reportedly ₹10 crore in annual receipts or those managing multiple donor-funded or government-linked projects. The reviews will assess compliance with the Companies Act, 2013, and check for discrepancies in fund utilization, beneficiary reporting, audit trails, and related party transactions.

According to officials, the CAB will focus on areas of potential misuse, including diversion of funds, under-reporting of income, inflated administrative expenses, and inconsistencies in statutory filings. The audit process will include digital access to financial records, cross-verification with MCA filings, and may involve on-site verification in high-risk cases.

This new oversight mechanism follows a series of regulatory enhancements aimed at formalizing and professionalizing India’s non-profit ecosystem. Section 8 companies found to be in violation of statutory obligations may face penalties, suspension of licenses, or disqualification from receiving CSR funds and tax exemptions.

Governance experts have welcomed the move, viewing it as a crucial step in building donor confidence, protecting public funds, and elevating the governance standards of charitable organizations. By introducing CAB audits, the government reinforces its commitment to transparency, efficient monitoring, and ensuring that high-value Section 8 entities operate with the integrity expected of public-spirited institutions.