Upon submission of:
- Data regarding Name, legal form, corporate seat, address, cause and year of foundation of the organization,
- Current notice of exemption (approval of the charitable, benevolent and/or clerical cause) as well as notice of registration in the register of associations by the responsible court (if available),
- Current statues / articles of association as well as other documents that provide information about the goals / causes pursued by the NPO (visions, outlines, criteria for funding and values),
- Annual Accounts / Financial Statement,
- Current report of activities,
- Other documents if necessary,
the audit will focus especially on:
a) The statutory appropriation of funds
b) Ratios of advertising- and administration cost
c) The internal control system (ICS)
e) Agreement of Self-Commitment
f) The Authority of Finances and Actions
g) Audit In-House.
A) The statutory appropriation of funds
- Proof about the responsible and statutory appropriation of funds and donations, and the appropriate limitation of advertising- and administration cost,
- Availablitily and currentness of reporting,
- Audit of Annual Accounts / Financial Statement,
- Non-financial reporting and
- Information about future situations.
Differentiated criteria have to be revealed if requested by the European Donations Seal.
B) Ratios of advertising- and administration cost
The European Donations Seal allows percentage of 35% of the annual income through donations to be spent on advertising- and administration. With regards to a German case law, the European Donations Seal will allow a percentage of 90% spent on advertising and administration during a 3-years start-up phase; provided the financial authorities agrees to that in writing.
C) The internal control system (ICS)
The European Donations Seal audits whether the nonprofit-organization has an appropriate and working internal control system.
It has to be ensured that the nonprofit-organization applies economic criteria when managing the given funds (e.g. donations, subscriptions etc.). Furthermore, it has to be ensured that the funds are only spent for statutory purpose of the nonprofit-organization. The design of the internal control system will be the center of the audit as well. This will mainly be done through a system audit (including a composition- and functionality audit).
Depending on the size, importance and the activities (e.g. foreign connections and foreign money transfer to other countries and continents) of the nonprofit-organization, we will also execute analytic audit activities and individual case reviews.
C. 1. An Internal Control System (ICS) consists of systematically designed organizational schemes and controls in order to observe the guidelines as well so to defend against possible damage caused by employees and malevolent third parties.
C. 2. The Principle of Transparence: This principle makes sure that concepts have to be set up for each and every process. These processes enable external supervising authorities to assess whether concerned parties conform to these concepts (nominal-actual comparison). Furthermore, the expectations of the organization administrations are defined.
C. 3. The Double-Verification Principle: This principle includes that in a well-functioning control system, no substantial process will be executed without control.
C. 4. The Principle of Seperation of Functions: This principle includes that executing activities (such as purchases), accounting activities (such as bookkeeping) and managing (such as stock management) activities performed in the same process are not implemented one-stop.
C. 5. Principle of Minimum Information: This principal includes that employees only have access to the information that is required for their work. This especially includes the IT-Areas (e.g. donator data bases).
The transparency of economic and substantial activities will be achieved by publication on the internet platform of the seal bearer.
E) Agreement of Self-Commitment
Self-Commitment includes but is not limited to Information about source and application of funds, staff structure and corporate cooperation.
F) The Authority of Finances and Actions
The integrity of the finance- and assistant managers are verified by assessing the police clearance certificate, if necessary.
G) Audit In-House
In-House audits will be performed if necessary.