Required Urgently; an Accounting Professional for the EPFO!!
Feb 02, 2011

Author: PersonalFN Content & Research Team

You might come across a classified (job opening) stating - "Required Urgently: an Accounting Professional for the EPFO" in the newspapers in coming days if the Employees Provident Fund Organization (EPFO) is not able to clear up the accounting goof ups done by it in the Provident Fund (PF) accounts.

The country’s Chief Auditor - the Comptroller and Auditor General (CAG) of India brought to the shore serious lapses in the accounts maintained by the EPFO - the custodian of the retirement savings of over 5 crore formal sector workers. Earlier the Finance Ministry had asked the CAG to do a special audit of the surplus found in EPFO’s past accounts amounting to the tune of 1,731 crore. While the CAG could not verify the adequacy of this surplus, it raised serious concerns on the way the accounting practices were followed by the EPFO.

For instance, the CAG report stated the provident fund had a balance of 169,650 crore but the EPFO could provide investment details for 168,280 crore, thus translating into a deficit of 1,366 crore, thereby violating norms as laid down in Accounting Standard 13 (AS 13). [The Employees’ Pension Scheme (EPS) too has similar deficit between investments and stated balance of nearly 1,150 crore! ] The report also pointed out that no depreciation was provided on buildings, resulting in understatement of expenditure and overstatement of the department's fixed assets. Another silly error (in our opinion even a commerce graduate wouldn’t make this mistake) pointed out was, expenditure on fixed assets, other than land and buildings, was treated as revenue expenditure; a violation of Accounting Standard 10 (which deals with fixed assets).

Further it was unearthed that remittances from regional PF offices to the head office remained in transit for an unusually long period. For example, out of 81.66 crore classified as remittances in transit by the EPFO, 79 crore had been in transit for over a year. (Only the EPFO or ‘Almighty’ would have an answer to this). To add more to this, there was a rising trend of irregular payments and overpayments made by the EPFO. Overpayments grew from 0.78 crore in 2005-06 to 2.25 crore in 2009-10, while irregular payments grew marginally from 5.15 crore to 5.35 crore in the same period.

We believe that the EPFO (an autonomous body under the Government of India) is filled with red-tapism (delay) and bureaucracy. It completely lacks professionalism in its working. The Government of India therefore in our opinion should take prudent and quick steps in revamping the EPFO, and ensure employees’ retirement money (managed by the EPFO) is safe.