Registered political parties

Wednesday, 29 May 2013 00:00 - - {{hitsCtrl.values.hits}}

I am happy to note that it has been suggested that all registered/approved political parties should have their accounts audited annually by professional auditors. Any organisation even club association, charitable organisation should maintain proper accounts duly audited for inspection.

For example, a children welfare society which receives donation from public is under obligation to maintain proper account and also should allow authorised Government officials to inspect their activities. Further audited accounts are necessary to ensure whether taxes have been properly paid.

The following benefits accrue:

Interest of money lenders creditors bankers., etc. is safe guarded
Activities of Club or Association are fairly disciplined
Misuse of public funds is fairly prevented
Using activities to avoid tax matters of trustees is prevented
Funds will not be used for illegal purposes

At present registered political parties receive funds from public by way of subscription donation. Practically no receipt is issued for donation. In the absence of proper audited accounts the usage of public funds is not scrutinised. Party subscribers should know how their funds are utilised in the proper way and also be satisfied that the party they support is trustworthy.

Since donation to political parties is not an allowed expenditure for donors in Sri Lanka, this expenditure is not properly revealed in the donors accounts. Either information (expenditure) is suppressed or shown under sundry expenditure. This encourages black money operation and frauds.

In 2009 Indian Supreme Courts had issued a commendable ruling that donation to registered political parties could be considered as an allowed expenditure for tax purpose. This was appreciated by economic experts. In Sri Lanka also the Department of Inland Revenue should accept donation to registered political parties as an allowed expenditure tax regulation should be introduced by the Government early. Therefore, all income and expenditure of registered political parties have to be properly accounted for and audited by professional auditors. Further tax clearance certificate should be obtained.

In 1976, a regulation was introduced that all liquor licences could be renewed only after obtaining tax clearance certificate for the previous year. This regulation should be made compulsory for registered political parties as well. I hope our readers support my views.

S.R. Balachandra, BSc. FCA, FCMA

Colombo 6.