Accounting And Auditing Practices In Charitable Trusts In India: A Study Of Financial Transparency And Accountability
Keywords:
Charitable trusts1; Financial transparency2; Accountability3; Statutory audit4; Non-Profit accounting5; Disclosure index6; Regulatory compliance7.Abstract
Charitable trusts occupy a structurally significant position in India's development architecture, mobilising household
philanthropy, corporate social responsibility outlays and foreign contributions towards education, health, relief and
religious purposes, yet the accounting and auditing regime that governs them remains fragmented across the Indian
Trusts Act, state-level public trust legislations, the Income-tax Act, 1961 and the Foreign Contribution (Regulation)
Act, 2010. This paper empirically examines accounting and auditing practices in Indian charitable trusts and
evaluates how those practices translate into measurable financial transparency and accountability. Primary data
were obtained through a structured questionnaire administered to 420 registered charitable trusts across eight states,
supplemented by content analysis of 210 audited annual reports and secondary regulatory data on Form 10B, Form
10BD and FCRA filings for the period 2016 to 2025. A composite Financial Transparency Index (FTI) comprising
twenty-four weighted disclosure items was constructed and analysed using descriptive statistics, one-way ANOVA,
Pearson correlation and multiple regression. The mean FTI stood at 54.3 out of 100, indicating moderate but uneven
transparency: only 38.4 per cent of micro trusts-maintained accrual-based books, whereas 89.2 per cent of large
trusts did, and public disclosure of financial statements remained the weakest dimension overall at 22.9 per cent
among micro trusts. Regression results show that corpus size, board independence, engagement of a qualified
professional accountant, receipt of foreign funding and digital bookkeeping are statistically significant positive
determinants of transparency, jointly explaining 61.4 per cent of its variance, while trust age is insignificant. Audit
quality correlates strongly with accountability outcomes. The study concludes that transparency in Indian charitable
trusts is driven less by statutory compulsion than by resource capacity and governance design, and recommends a
proportionate, tiered reporting standard, a mandatory public repository of trust accounts, and capacity-building for
small trusts.
