ngo compliance
TRANSCRIPT
NGO WORLD at NCRD
INTERNATIONAL DAY OF NGOs NGOs
By M.Yousaf Khan FCMA
Thursday February 27’ 2014By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
M.Yousuf &
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By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
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ISSUES & CHALLENGES IN PAKISTANISSUES & CHALLENGES IN PAKISTAN
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
Regulatory Structure in Pakistan
The kinds of laws that govern NGOs fall into two categories: No1: Registration laws that define No1: Registration laws that define internal governance and No2: The Reporting relationship between the state and the NGO, and taxation laws.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
Expected benefits of registration
1. The ability to enforce by-laws;
2. statutory requirements that force an NGO to become organized;
3. legal status “at the official level and among donors;”
4. the ability to open a bank account;
5. the ability to sign contracts;
6. the ability to indemnify employees; and
7. the ability to qualify for financial assistance and tax exemption.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
Regulatory Structure in Pakistan
Registration
COMPANIES ORDINANCE
1984
VSWA 1961TRUST ACT
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
Registration VSWA 1961
SOCIETIES ACT 1860
TRUST ACT 1882
Compliance Requirements for NGOs
NGO
Taxation
CorporateInternal NGO Corporate
Donors specific
Compliance
Internal /Finance
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
COMPLIANCE BY REGULATORS
FederalGovernment
ProvincialGovernments
InternationalDonor requirements
PCP,SECP,FBR & EADetc.
Social Welfare Departments in
USAID,UNDP,UNICEF,CIDA,
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
etc. Departments in provinces
UNICEF,CIDA,AUSAID.etc
ISSUES & CHALLENGES
� Lack of formal regulatory & monitoring mechanism
� Lack of central data base of NGOs
� Lack of proactive approach by government.
� Lack of coordination among various bodies governing � Lack of coordination among various bodies governing NGOs in provinces as well as at Federal government level.
� High cost of compliance specially at SECP &
� Tough evaluation criteria by PCP
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
RECOMMENDATIONS FOR IMPROVEMENT
� Development of central data base of NGOs
� Single registration authority like Central Registration Authority (CRA) may be created to regulate an online registration process for applicants other than SECP.
�CRA may constitute member from SWD,ICMAP,ICAP,PCP,FBR Representatives from leading NGOs to standardize & stream line registration process. line registration process.
� Initially the process may provide registration option under any of the existing statutes under the centralized process.
� In future a new unified registration may be issued as per international best practices prevailing in the world.
� FBR,PCP ,CRA or any registration authority may access the information from the central data base of the CRA and process relevant their registration on step by step basis.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
RECOMMENDATIONS FOR IMPROVEMENT
�Training & Development facility may be provided by central registration authority .
�Initial training shall be made mandatory for new NGOs for better governance & compliance in Accounting, Finance, Taxation , HRM, Program, governance, Procurement.
�However specialized trainings (optional) like Proposal �However specialized trainings (optional) like Proposal Writing, Financial Management & Reporting , Internal Controls may be provided at nominal charges to interested NGOs.
�Online training programs may also be organized in collaboration with ICMAP/Allama Iqbal Open University for easy access & flexible timing of NGO people.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
RECOMMENDATIONS FOR IMPROVEMENT
� License of NGOs may be issued initially for a one year period and its annual renewal may be linked with presentation of Audited Accounts & Filing of Income Tax Returns by NGOs.
�In order to promote easy and cost effective compliance, Central Registration Authority (CRA) may issue complete Central Registration Authority (CRA) may issue complete rules & regulations for monitoring and subsequent compliance like annual audit & compliance including fee fixation for audit.
�CRA may conclude an MOU with ICMAP for compliance services to NGOs at standardized terms & conditions for general support to NGOs.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
RECOMMENDATIONS FOR IMPROVEMENT
� License of NGOs may be issued initially for a one year period and its annual renewal may be linked with presentation of Audited Accounts & Filing of Income Tax Returns by NGOs.
�FBR may allow basic exemption u/s 2(36) without PCP certification , however afterwards same may be required after 3 years or as the period CRA may decide.
�In order to promote easy and cost effective compliance, Central Registration Authority (CRA) may issue complete rules & regulations for monitoring and subsequent compliance like annual audit & compliance including fee fixation for audit.
�CRA may conclude an MOU with ICMAP for compliance services to NGOs at standardized terms & conditions for general support to NGOs.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.
NOTES TO BE CONSIDERED
� This document is open for comments from all stake holders.
�The purpose is to start a reform process for improvement in governance , compliance and effective management of NGOs
�This document is a suggestive for stake holders and may be revised ,upon relevant comments from stake holders.
�Process relating to registration u/s 42 of the Companies Ordinance has not been changed at this point of time as ICMAP has already been actively involved in revised Code f corporate governance with SECP as well as with EAD.
By: M.Yousaf Khan FCMA,CEO MYC.President ICMAP TMs Club.