Case Study: Undelivered Purchases, Cash Leakage and Hidden Overheads in a CSR-Funded NGO

The utilisation certificate, signed by the NGO's statutory auditor, reported Rs 48 lakh on materials and equipment, Rs 35 lakh on field staff, Rs 18 lakh on venues and logistics, Rs 12 lakh on monitoring and evaluation and Rs 7 lakh on administration: Rs 1.2 crore in total. On a site visit, the CSR head saw fewer beneficiaries than reported, equipment that did not match the invoices, and two funded "field staff" who could not be found. The committee wanted evidence before deciding on the next year's funding.

Vendors with no evidence of delivery (Rs 30 lakh)

Of 8 vendors, 3 were genuine businesses (Rs 18 lakh). The other 5 had invoiced Rs 30 lakh: two were registered at residential flats with no business activity, one at the home of the programme director's brother, and two had filed GST returns only for the months they invoiced the NGO. Across all three sites, Northrop found 4 laptops against 22 invoiced, 1 projector against 6, and none of the training kits that had been billed.

Cash without verifiable support (Rs 16 lakh)

Cash withdrawals averaged Rs 1.75 lakh a month, seven times the Rs 25,000 petty cash limit, or Rs 21 lakh for the year. Only Rs 5 lakh had genuine vendor receipts. The rest had receipts written by the NGO's own staff (Rs 7.5 lakh), no receipt at all (Rs 5 lakh) or photocopied receipts reused across different dates (Rs 3.5 lakh).

Overheads recorded as programme costs

Reported administration of Rs 7 lakh (5.8%) was already above the funding agreement's 5% cap. Reclassifying expenses by their true nature added Rs 9.6 lakh for four head-office staff booked as field staff, Rs 4 lakh for the programme director's travel to cities with no project site, and Rs 5 lakh paid to a monitoring consultant (a former colleague) who produced no reports. True administration: Rs 25.6 lakh, about 21% of the contribution and more than four times the cap.

Salaries charged to the wrong programme

Of 14 staff charged to the programme, 8 genuinely worked in the field. 4 worked at head office (the Rs 9.6 lakh above). 2 could not be found at all, though their salaries of Rs 4.8 lakh were drawn every month.

Books that resist reconstruction

Expenses were posted as monthly category totals rather than individual invoices. The chart of accounts was changed mid-year. Book and bank balances differed by Rs 3.4 lakh with no reconciliation, and the cash book was written up in month-end batches.

The funder ended the relationship and recalled the Rs 28 lakh of the current year's tranche that was still unspent. On legal advice, it filed a complaint with the NGO's registering authority. It then engaged Northrop to review its other NGO partners before the next funding cycle.

A utilisation certificate tells you how the money was classified. It does not tell you whether the laptops exist.

This is an illustrative case study. Names, figures and identifying details are altered or constructed.