Case Study of Hrdya Sara’s Foundation : Internal Audit and Financial Reporting
Hrdya Sara’s Foundation : Building donor-ready financial reporting, internal controls and financial transparency for a growing social foundation
Executive Mandate Summary
Key Transaction & Governance Challenges
- •All programmes operated through a common accounting pool, making it difficult to connect donor funds to specific activities.
- •Controls existed informally, but there was no systematic testing of whether they were actually being followed.
- •Some vouchers lacked receipts, petty-cash payments were not recorded contemporaneously and vendor invoices sometimes lacked purchase-order references.
- •The foundation could prepare annual financial statements but could not readily produce donor-specific utilisation or programme-level financial reports.
Northrop Execution Architecture & Methodology
Section 1 - The Central Issue
The foundation was delivering genuine programmes but its financial infrastructure was built primarily for compliance filing rather than donor accountability. The gap between programme quality and financial documentation was affecting donor confidence.
Section 2 - Diagnostic
Northrop conducted a structured review and identified 34 findings across financial reporting, internal controls, documentation, governance and compliance. The findings were prioritised into six critical, fourteen significant and fourteen operational issues.
Section 3 - Rebuilding Financial Visibility
A dual-classification chart of accounts linked each transaction to both its nature and the donor/programme it supported. This created, for the first time, programme-wise income and expenditure statements, donor-wise utilisation reports and comparative programme analysis.
Section 4 - Installing Internal Audit
A proportionate internal audit framework was designed around the foundation's actual scale and risks, covering procurement, cash, expense approval, payroll and documentation. Quarterly testing was introduced to verify whether controls were operating and whether previous findings had been remediated.
Verifiable Institutional Outcomes & Value Realized
- Donations grew by over 150% following improvements in financial transparency and internal audit.
- All 34 findings were addressed within the first two audit cycles.
- Six critical findings were resolved within the first 60 days.
- Fourteen significant findings were resolved within 120 days.
Ashish Chaudhary
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