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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Accounting deficiencies, management inefficiencies at EPF

Accounting deficiencies, management inefficiencies at EPF

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CSE.SAS

CSE.SAS
Global Moderator
Controversy continues to haunt the Central Bank managed Employees’ Provident Fund (EPF) with the Auditor General’s Department highlighting "accounting deficiencies", "non compliance with laws, rules, and regulations", "management inefficiencies", "uneconomic activities" and "idle and underutilised assets" in the fund’s activities for 2010 fiscal year.

The Auditor General highlights these short comings in the management of the EPF in the fund’s latest annual report.

Some of the issues highlighted were as follows:

"The ledger of the Employees’ Provident Fund in the Department of Labour had not been properly maintained and a journal to identify the entries in that ledger clearly and in detail had not been furnished to audit.

"Even though the receipts and payments made to / by the District offices on court orders had been shown as receipts and payments amounting to Rs. 219,871,362 and Rs. 178,195,942 respectively in the deposit account, they had not been disclosed in the final accounts.

"As a sum of Rs. 15,413,871 relating to the employees’ Provident Fund had been transferred from the Labour commissioner’s Imprest account to the Commissioner General of Labour accounts the correct right of the beneficiaries of the Fund had not been shown in the accounts.

"Contributions totalling Rs. 3,449,915,049 collected by the Commissioner General of Labour by filing court cases and collected as arrears of installments which should have been credited to each member’s account had not been credited to the relevant memberaccount even by 30 June 2011.

"The balances of the UP and OP Contribution account amounting to Rs. 856,668,078 which is being increased since the beginning of the Fund had not been settled even by 30 June 2011.

"At test carried out in audit in respect of surcharging for non-payment of Employees’ Provident Fund contributions on due dates with the data base system in the Central Bank of Sri Lanka, it was revealed that action had not been taken to recover surcharges of Rs. 101,547,938 due from 72 institutions registered with the Fund for the period from 2000 to 2009 even by 30 April 2010.

"Irrespective of the place of starting the official travel and the place of temporary residence during the official visit, travelling expenses of Rs. 16,767,657 had been paid including the combined allowances for official visit within the Urban Limits.

"The amount of Rs.62,571,667 recovered during the period 2005 to 2008 as contributions of the members of the

Employees’ Provident Fund and surcharges recovered by courts had been credited to the government revenue during the year under review without being credited to their personal accounts due to non availability of information of the relevant members with the Fund.

"Even though the refund of contributions of deceased members of the Fund should be paid to their nominees, refunds relating to the year 1986 had also not been made. It was revealed that a sum of Rs.16,572,359 relating to 79 applications from 2007 to 2009 which had been examined had not been paid yet.

"Applications of the beneficiaries now in dormant client institutions of the Employees’ Provident Fund are referred to a committee consisting of the members of the Central Bank of Sri Lanka and the Department of Labour to make the payment by considering the difference in names of the applicants. Due to inefficiency of that committee, benefits valued at Rs.49,635,261 in respect of applications of 430 members elapsed for one or more than one year had not been paid even by 30 June 2011.

"In the examination of the Register of public Evidence in the Colombo South District Labour Office it was observed that there were 27 instances for which legal action had not been taken to recover contributions and surcharges even though a long period had elapsed after sending the legal act 01 and 03. The outstanding contributions and surcharges recoverable therein amounted to Rs.22,880,445.

"The reply to the audit query reported in respect of the value of Rs.313,452,501 relating to the matters such as non-taking legal action by filing court cases to recover the contributions and surcharges from institutions attached to the area of authority of the Colombo Central District Labour Office, non-taking follow up action though cases were filed, evasion of payment of installments by institutions who had been given such facilities, no-recovery of Employees’ Provident Fund contributions before institutions were liquidated, non-settlement of money deposited in the Employees’ Provident Fund Suspense account by issuing "c" Forms, non-crediting the contributions and surcharges received during the period from 2003 to 2006 to the respective individual members accounts and non-recovery of surcharges had not been submitted even up to 30 June 2011. Even though it was stated that the reply would be submitted in respect of the paragraph 3.2.5 (d) of the Auditor General’s report for the year 2009 indicating the above matters within 2 weeks after being investigated, no reply had been sent even as at that date.

"Legal process initiated in respect of 93 instances to recover the outstanding contributions and surcharges of Rs. 14,727,297 within the area of authority of the Colombo South District Labour Office had been suspended half way due to rescheduling of court cases, putting cases to a side, appealing and as such benefits receivable by the members of the Fund had been deprived.

"Despite an offset printing machine valued at Rs.21,884,084 had been purchased in the year 2008 for the printing of forms of the Employees’ Provident fund purposed, a sum of Rs.4,086,322 had been paid to the Government Press in the year under review for printing specimen forms.

"Capital items valued at Rs.5,399,660 purchased under the expenditure items of the Employees’ Provident fund had been given to the Department of Labour.

"Five Kiosk machines and related accessories valued at Rs.7,457,195 purchased under the Project of the Re-registration of members of the Employees’ Provident Fund had not been installed in the relevant location and utilized even as at 30 June 2011.

"15,000 memory chips valued at Rs.10,965,000 purchased for the issue of identity cards under the same project had been lying idle without being used.

"Deficiencies in system and control observed during the course of audit were brought to the attention of the Commissioner General of Labour and the Superintendent, Central Bank of Sri Lanka from time to time. Special attention is needed in respect of the following areas of control: Department of Employees’ Provident

Fund, Central Bank of the Sri Lanka- (a) Accounting (b) Internal Audit (c) Bank Accounts and (d) Dishonoured Cheques. Employees’ Provident Fund Division of the Department of Labour- (a) Accounting (b) Recovery of Surcharges (c) Replies to Audit queries (d) Fixed Assets (e) Advances and Pre-payments and (f) Inspection of client Institutions."
http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=56876

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