In order to help NGOs comply with Section 22 of the NGO law which requires them to submit reports including audited financial statements, the Authority met with auditors on Friday, June 23, 2023 in Blantyre.
NGORAs Director of Corporate Services, Linda Njikho said that it is unfortunate that most NGOs fail to comply with this provision citing high audit fees as the main reason. She described the meeting as fruitful and said that it has enabled the Authority to understand some of the issues that are faced both by the auditors and NGOs. She further said that this will enable the Authority to come up with ways on how best to improve compliance in the sector.
“Looking at the rate of compliance in the sector and the issues that the sector has brought to our attention on why they are failing to comply with the requirement of the law to submit reports, we thought it wise to engage MAB and ICAM as regulators to discuss these issues, map the way forward and see how best we can help the NGO sector to comply with the requirements of the Act,” she said.
ICAMs Assistant Technical Officer, Chisomo Kasowanjete said that audit costs are determined by the complexity of work to be done and not the size of the NGOs.
He added that one of the challenges faced by the sector leading to high audit costs stems from the fact that some NGOs do not usually hire full time accountants, and only hire them based on requirements by donors due to funding issues.
“Sometimes small NGOs handle huge finances and therefore have complex audits depending on the resources channeled to them. The charges therefore are dependent on the complexity of work and volume of transaction involved in that institution and not the size of the NGO itself,” he said.
He added that there is a need to create awareness in the sector where audits are seen as a tool to get more funding and as such NGOs should include audits as part of budgetary requirements. He also advised NGOs to take audits as an initial phase and as a complimentary unit in their work and not just as a support function.
“Audits should not be seen as a support unit to the institution, but rather a complimentary unit to the operation of the exercise,” he said.
NGORA has pledged to continue working with ICAM to build the capacity of NGOs to help them comply with the law and produce proper financial reports.