Parl panel suggests third-party audit of CSR spending by companies

The Parliamentary Standing Committee on Finance expressed concerns over the monitoring mechanism in ensuring compliance with the provisions of CSR

A Parliamentary panel on Tuesday suggested that the government should conduct a third-party audit of CSR spending by corporates.

The Parliamentary Standing Committee on Finance, headed by BJP member Jayant Sinha, also expressed concerns over the monitoring mechanism in ensuring compliance with the provisions of CSR, saying that information regarding such spending by companies are "insufficient and difficult for a layperson to access".

Under the Companies Act, 2013, a certain class of profitable entities are required to shell out at least 2 per cent of their three-year annual average net profit towards Corporate Social Responsibility (CSR) activities in a particular fiscal.

The Act is implemented by the corporate affairs ministry.

While the ministry is of the opinion that the existing legal provisions provide adequate safeguards, the committee recommends that a third-party audit of CSR spending may be carried out by the ministry "which would bring about transparency in CSR disclosures and accountability of companies in their CSR spending," the panel said.

The recommendation is part of its report on the ministry's demand for grants for 2022-23 tabled in Parliament on Tuesday.

Among others, the committee has suggested that contribution to the Chief Minister's Relief Fund may be included under Schedule VII of the Act.

Schedule VII pertains to CSR.