A CSR audit checks whether a company met its corporate social responsibility duties under Section 135 of the Companies Act: that it formed the committee, spent the required amount, used approved projects and handled unspent money correctly. An impact assessment is different. It asks whether the projects achieved anything. The rules require a formal impact assessment only for larger companies and larger projects.
Last reviewed: 17 October 2026. Facts checked. We opened the text of Section 135 and the text of Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, both on ca2013.com, a secondary legal site and not the MCA. We did not open MCA's own notifications. Our searches also showed a disagreement over the cap on booking assessment costs as CSR spend, so we state no cap. Confirm current text on the MCA site before relying on any number here.
Who must do CSR
Per Section 135(1) as shown on the page we opened, a company must form a CSR Committee if it meets any one of these tests in the immediately preceding financial year (the year is as shown in the India Code text of section 135 we checked for a companion post):
| Test | Threshold |
|---|---|
| Net worth | Rs 500 crore or more |
| Turnover | Rs 1,000 crore or more |
| Net profit | Rs 5 crore or more |
Section 135(5) says the board must ensure the company spends at least 2% of its average net profits of the three immediately preceding financial years. Average net profit is worked out under Section 198. Our CSR calculator does this arithmetic.
What a CSR audit reviews
An auditor or internal reviewer typically tests:
| Area | What is checked |
|---|---|
| Applicability | Which test the company meets, with figures from the accounts |
| Committee and policy | Committee formed, policy approved, minutes held |
| Obligation | Two percent of average net profit, calculated correctly |
| Projects | Approved by the board, within Schedule VII activities |
| Spending | Proof of payment, implementing agency records |
| Unspent amount | Handled as Section 135(6) says |
| Reporting | Annual CSR report content and the board's report |
Our existing guide, CSR audit and compliance with Schedule VII, covers these areas. This article focuses on what is new for the assessment layer.
Unspent money
The page we read says that for an ongoing project, unspent money must be moved within 30 days after the year-end into a separate bank account called the Unspent Corporate Social Responsibility Account. It must be used within three years of transfer. If it is not, the company must pay it into a Schedule VII fund within 30 days after that period ends. A reviewer should check the dates against bank statements.
What the impact assessment rule asks
Rule 8(3), per the text we opened, sets these conditions:
| Element | Rule |
|---|---|
| Which companies | Those with an average CSR obligation of Rs 10 crore or more |
| How the average is taken | Over the three immediately preceding financial years |
| Which projects | Those with outlays of Rs 1 crore or more |
| Project timing | Completed at least one year before the study begins |
| Who does it | An independent agency |
| Where it goes | Placed before the board and annexed to the annual CSR report |
So the two thresholds work together. The company must reach the Rs 10 crore average obligation, and only projects at or above Rs 1 crore of outlay need a study. Smaller companies and smaller projects need no formal study under this rule, though they may do one by choice.
What a good impact assessment looks at
The rule does not prescribe a method in the text we read. In practice, a useful study covers:
- The problem the project meant to solve
- The baseline before the project
- Outputs, such as people trained or wells built
- Outcomes, such as changes in income or school attendance
- Whether the change can last
- Cost against result
- Lessons for the next project
An impact assessment answers a different question from the audit. The audit asks if money was spent properly. The study asks if the money did good.
How an auditor uses the impact report
- Check that the agency is independent, with no ties to the implementing partner
- Check the project met the Rs 1 crore and one-year tests
- Check the report reached the board and was annexed to the CSR report
- Read the findings and ask what management did about them
Frequently Asked Questions
Is a CSR impact assessment mandatory for every company?
No. Under Rule 8(3), as we read it, it applies to companies with an average CSR obligation of Rs 10 crore or more, and to projects with outlays of Rs 1 crore or more completed at least a year before the study.
Who can carry out the impact assessment?
An independent agency. We did not find a list of approved agencies in the text we opened.
Can the cost of the assessment count as CSR spend?
The rule allows it up to a limit. We found conflicting figures for the limit and do not state one. Check the current notified text.
What happens to unspent CSR money?
For ongoing projects, it goes to the Unspent CSR Account within 30 days of year-end and must be used within three years, per Section 135(6).
Does the CSR audit cover the impact study?
They are separate, but an auditor reviewing CSR compliance should check whether a study was due and done.
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