Daily bank reconciliation and donor-source tagging

Finin2min Summary — in 2 Minutes

Official source and legal ownership

What this covers

Because FCRA compliance depends on being able to trace every rupee of foreign contribution from a specific donor through the designated account and any subsequent utilisation account to its eventual application, organisations need a disciplined practice of reconciling their FCRA bank accounts against donor-source records on an ongoing basis - not merely at year-end when the annual return falls due.

How donor-source tagging works

Each credit to the designated account should be tagged to its donor and, where relevant, to the specific project or purpose the contribution was given for - this tagging is what ultimately supports the project-wise and location-wise utilisation reporting the annual return requires, and what allows an organisation to answer a regulator's query about any specific receipt without reconstructing records after the fact.

Why it matters

Because the annual return (Form FC-4) requires donor-wise and purpose-wise disclosure, an organisation that reconciles only annually - rather than daily or at least regularly through the year - risks discovering gaps, misclassifications, or unexplained credits only when it is too late to correct them cleanly before the filing deadline.