Please help in understanding the Rule 5 for administrative expenses and to report project wise expenses in FC-4
Thanks for your query.
Rule 5 defines Administrative expense out of FC utilization during a financial year for adhering to the 20% ceiling. The 20% ceiling is on FC receipts during the year. The Rule is reproduced below:
The following shall constitute administrative expenses:
i. salaries, wages, travel expenses or any remuneration realised by the Members of the Executive Committee or Governing Council of the person;
ii. all expenses towards hiring of personnel for management of the activities of the person and salaries, wages or any kind of remuneration paid, including cost of travel, to such personnel;
iii. all expenses related to consumables like electricity and water charges, telephone charges, postal charges, repairs to premise(s) from where the organisation or Association is functioning, stationery and printing charges transport and travel charges by the Members of the Executive Committee or Governing Council and expenditure on office equipment;
iv. cost of accounting for and administering funds;
v. expenses towards running and maintenance of vehicles;
vi. cost of writing and filing reports;
vii. legal and professional charges; and
viii. rent of premises, repairs to premises and expenses on other utilities:
Provided that the expenditure incurred on salaries or remuneration of personnel engaged in training or for collection or analysis of field data of an association primarily engaged in research or training shall not be counted towards administrative expenses:
Provided further that the expenses incurred directly in furtherance of the stated objectives of the welfare oriented organisation shall be excluded from the administrative expenses such as salaries to doctors of hospital, salaries to teachers of school etc.
Please esnure consistency in classification of expenses as admin and also see if the benefits of the two provisos above can be taken by your organization.
In FC 4 clause 3(a), utilisaiton has to be reported by project containing details of opening balance, receipts, utilization and closing balance. No negative closing balance is permitted. The detailing of program and admin expenses has also to be made in the same clause. It will be better to share calculation of admin expenses in Notes to Accounts of your FC audited financial statements.
CS Sharad Bhargava
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In the FC-4 annual return, the Utilisation Page has items A, C and D only. There is no B item.
In that page, under i) we normally input program based expenditure and under ii) the admin expenditure during the FY. As we have nothing to mention in C), the total is correctly polluted in D).
But in the Utilisation - Project wise page, under A) normally we input previous balance in column 4, receipt during the year in column 6, utilisation in column 8 and balance will get automatically polluted in column 10. In column 6, we normally input the actual FC receipt and interest gained during the year. In column 8, we input the total utilisation for project and admin and then only the correct balance will get automatically polluted in column 10. But this time, after the reorganisation of the page, it is restricting us to input only the program expenses in column 8 and as a result we are unable to include the admin expenses and as a result, the balance is also incorrect. This may be due to some technical error, which we request to rectify for the smooth filing of FC-4 return.
If we make a change in A(i) in the utilisation page, mentioning the total expenditure including program and admin expenses, then the overall expenditure polluted in D, becomes incorrect.
If it is a technical error, it has to be rectified by the FCRA dept. Otherwise, someone can guide us in correctly filling the FC-4 with all the figures given by the auditor in his certificate