What is the objective of providing impact assessment of CSR activities?
The purpose of impact assessment is to assess the social impact of a particular CSR project. The intent is to encourage companies to take considered decisions before deploying CSR amounts and assess the impact of their CSR spending. This not only serves as feedback for companies to plan and allocate resources better but shall also deepen the impact of CSR.
Which companies are required to undertake impact assessment?
Rule 8(3) of the Companies (CSR Policy) Rules, 2014 mandates following class of companies to conduct impact assessment:1. companies with minimum average CSR obligation of Rs. 10 crore or more in the immediately preceding 3 financial years; and2. companies that have CSR projects with outlays of minimum Rs. 1 crore and which have been completed not less than 1 year.
Whether companies are required to undertake impact assessment for FY 2020-21?
The provisions for impact assessment have come into effect from 22nd January, 2021. Accordingly, the company is required to undertake impact assessment of the CSR projects completed on or after January 22, 2021. However, as a good practice the Board may undertake impact assessment of completed projects of previous financial years.
Who can conduct impact assessment?
SRule 8(3) of the Companies (CSR Policy) Rules, 2014 requires that the impact assessment be conducted by an independent agency. The Board has the prerogative to decide on the eligibility criteria for selection of the independent agency for impact assessment.
Whether impact assessment reports of all the CSR projects shall be annexed to the annual report on CSR?
Rule 8(3)(b) of the Companies (CSR Policy) Rules, 2014 provides that impact assessment reports shall be placed before the Board and shall be annexed to the report on CSR. It is clarified that web-link to access the complete impact assessment reports and providing executive summary of the impact assessment reports in the annual report on CSR, shall be considered as sufficient compliance of the said rule.
Is expenditure on impact assessment over and above the administrative overheads of 5%, or included in the same?
Yes, the expenditure incurred on impact assessment is over and above the specified administrative overheads of 5%. Expenditure up to a maximum of 5% of the total CSR expenditure for that financial year or 50 lakh rupees (whichever is lower) can be incurred separately for impact assessment.
When two or more companies collaborate for implementation of a CSR project, should the impact assessment carried out by one company be shared with other companies?
Yes, in case two or more companies choose to collaborate for the implementation of a CSR project, then the impact assessment carried out by one company for the common project may be shared with the other companies for the purpose of disclosure to the Board and in the annual report on CSR.
