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Trust - Management & Accounts
Management
Trust is governed by Trust Deed and therefore the way the Trust needs to be managed, shall be defined in the deed itself. In absence of any specific requirement in the deed, the Trustee shall manage the trust in accordance with his will but while doing so, the trustee must act prudently and for the benefit of the beneficiaries. Generally trusts are managed by the appointed governing body on behalf of the trustees.
Trustee is the sole person responsible for managing the Trust, he is authorized to take all decision regarding the manner in which the Trust shall be managed and operated except to the extent provided in the Trust Deed. The Trustee is responsible for managing the bank account, hiring employees, making investment for utilizing the funds of the Trust etc.
Accounting & Audit
There is no prescribed requirement of maintenance of accounting records for the Trust. But as a general prudent business requirement, the Trust shall maintain the following books of account to record the financial transactions.
- All sums of money received and the sources thereof
- All sums of money spent by the Trust and the objects or purposes
- All sales and purchase of goods by the Trust
- Assets and liabilities of the Trust giving fair view of state of affairs
Method of accounting:
Books of Accounts of Trust shall be maintained in accordance with double entry system and on accrual basis. Every entry in the books of account should be made as and when the particular event occurs.
Financial Statements
At the end of the financial year, the Trust shall in order to judge the financial performance, prepare annual financial statements, which would consist of the following:
- A Balance Sheet – to give a true and fair view of the state of affairs of the Trust as at the end of the financial year; and
- An Income and Expenditure Statement – to give a true and fair view of the profits or losses of the Trust for the financial year.
Audit Requirements
Except to the extent provided in the deed governing the Trust, there is no legal requirement to get the accounts of the Trust audited but in order to ensure transparency in the operations, it is always advisable to get the annual accounts audited by chartered accountant in practice. The Auditor of the Trust should be appointed by Trustee or the governing body by way of resolution.
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