There has been a rapid increase in the number of Not for Profit Organisations (NPOs) in India. These organisations have to follow various accounting, tax and regulatory frameworks. Some of these organisations receive foreign contributions/grants and have to follow the Foreign Contribution (Regulation) Act, 2010 (FCRA). In September 2010, the Central Government made certain amendments to the FCRA. The amendments relate to renewal of FCRA registration, restriction on sub-granting of foreign contributions, lowering of cap administrative expenses from 50 per cent to 20 per cent, etc. In this edition of Accounting and Auditing Update (AAU), we explain the implications of these amendments on NPOs in India and also highlight areas of consideration for NPOs in order to operate efficiently and effectively in India.

Globally Environment, Social and Governance (ESG) regulatory framework and markets are expected to continue to evolve in a fast manner. In July 2021, the European Commission adopted a comprehensive package of measures to help improve the flow of money towards financing the transition to a sustainable economy. According to European Commission, financial system has a role to play in this transition by reorienting private capital to more sustainable investments, fostering more transparency and long-termism in the economy. These developments led European Securities and Markets Authority (ESMA) to build its Sustainable Finance Road map 2022-24 and it was released on 11 February 2022. The road map sets out ESMA’s key priority areas – which are tackling greenwashing and promoting transparency, building National Competent Authority (NCAs) and ESMA’s capabilities and monitoring, assessing and analysing ESG markets and risks. Our article on this topic summarises key actions that ESMA plans to take regarding these three priority areas.

Recently SEBI at its board meeting on 15 February 2022 made the mandatory requirement of separation of the role of Chairperson and Managing Director/Chief Executive Officer (CEO) to voluntary by listed companies. The Ministry of Corporate Affairs requires companies to furnish a corporate social responsibility report for the financial year 2020-21 and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC, as the case may be. Our regulatory updates section covers these and other important regulatory developments in India.