Reclassification of Income item back to General Fund (Balance Sheet)

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This query is : Resolved

CA. LP (Querist)

09 June 2025 Dear All,
While finalizing the Financial Statement for the Charitable Trust for the fiscal year 2024-25, I observed that certain corpus funds, which were transferred to income in FY 2023-24 and reported in the Income and Expense statement last year, have now been moved back to the Corpus (General) Fund. This adjustment has resulted in these funds being reported as a balance sheet item, thereby increasing the General Fund.

Is it acceptable to present the financials in this manner for the current year? Last year, this same fund was classified as 'Other Income,' and the net surplus was added to the General Fund (Balance Sheet item). This year, the auditor has reduced the value of the last years closing General Fund balance and subsequently added last year's income back to the Corpus Fund.

Thank you in advance for your guidance on this matter.

Nikhil Kaushik

Nikhil Kaushik (Expert)

10 June 2025 forget the accounting for a minute. A corpus fund is governed by the restrictions placed by the donor. First check the documentation for the restrictions placed on corpus, and then the documentation for the release of corpus funds for general uses.

Same applies to the reversal.

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