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Audit checklists

MAA Television Network Limited 1. Checklist on PF

Praturi & Sriram

I.EMPLOYER S AND EMPLOYEE S CONTRIBUTIONS

Particulars a) Is this establishment covered under the scope of PF Act? (based on number of employees) Check whether Registration Certificate is obtained or not? If applicable. If obtained what is the Business number ? Does the establishment fulfill the essential requirements mentioned in the Act? (Requirements as per the Act: number employees > or equal to 20 to this(maa tv) type of establishment Are proper personnel records kept for all employees (e.g. engagement letter, rates of pay, specimen signatory, etc)? Check the correctness of PF Computation with respect to the percentages and also maximum ceiling amounts i.e. 12% in terms of Percentage in both the cases of employee and employer (Employer's Share Total 13.61% breakup is as follows goes to EPF - 3.67% goes to Pension Fund (FPF) - 8.33% Administration charges to be borne by Employer - 1.1% Employees' Deposit Linked Insurance (EDLI) - 0.5% Adm. charges to EDLI - 0.01%) & maximum ceiling of Rs.780 (employer contribution). Check the definition of salary for the purpose of calculation of PF as per the Provident Fund Act (Basic wages + DA + retaining allowance) Ensure that the total contributions are

Yes/No/NA Yes

Observations

b)

Yes

Allotted business code is AP/HY/42265

c)

Yes

d)

Yes

e)

We observed that the PF calculation in this establishment is as follows: a) Employer Contribution: First 12% is calculated on total wages/basic, then they adjust 8.33% towards pension fund but subject to max of 542(i.e. 8.33% on 6500 amount of wages) and balance to EPF account. But as per Act EPF is also subject to ceiling i.e.Rs.780 which is 12% on 6500. b) Employee contribution: calculated as 12% on the total basic, i.e. As per the Act.

f)

Yes

Salary for the purpose of PF calculation is Only Basic, because DA is not applicable to this establishment.

g)

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MAA Television Network Limited


Yes

Praturi & Sriram

credited to the correct account of the Fund by 15th of the succeeding month. h) Check contributions of both employees and the employer into the individual accounts of members of the fund.

Yes

We observed that these amounts are credited to the employee account annually, by the PF Authorities based on information provided in Form 3A (Showing the details of the employees and contribution, voluntary higher contribution, Business code of the employer, period, etc..)

i)

Where an employee makes voluntary contributions Check with reference to the receipt books, if they are made in cash. Check with the applications received if they are deducted from the salaries. Do you have contracted labor? If yes whether PF is applicable to them also? (if organization is covered under PF then PF applicable to them also)

No

j)

Yes

Contract labor is only for housekeeping and security purposes. Panjagutta office : Gayatri security for both house keeping and security Madhapur office: Simon and Shield for housekeeping, B-earth spire (India) limited for security To them PF is not applicable because they have to pay the contracted amount to the contractor Though inspection note book is there, no remarks are quoted in the book

k)

Is Inspection Note book maintained by the company? Examine the remarks quoted by PF Inspector visiting the Company periodically. At what period are the returns filed by the establishment?( As per the Act returns should be filed within one month from the end of the financial year.)

Yes

l)

Yes

Annual returns Submission period for this establishment is from March to February, but this year PF returns are submitted on 12-07-2011, which falls out of the due date, & the HR executive gave an explanation that due the change in software of PF office there was delay , but no documentary evidence was provided Date of joining

m)

If an employee is recruited, within how

Yes

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MAA Television Network Limited

Praturi & Sriram

many days is he covered under these acts? (from the date of joining) n) Check whether PF Form 10 (containing the details of employees left) submitted by 25th of the following month to the concerned PF authorities or not? Yes Form 10 submitted in April, May, June, July. Submitted on June 2011 Four members left the organization (Sai rama Krishna , Seetha polaganmi , Manoj kumar , Uttam Kumar) We observed that this amount is either transferred to his new PF account or paid to him by Cheque /Transferred to his bank account. After expiry of 3 years the employee has to prove himself as the employee of the organization by attesting notary on a stamp paper that he is the concerned person Pending claims: List is not provided.

o)

When an employee is terminated/has resigned from the establishment and has been recruited in an organization covered under PF Act then check that the amount standing to his credit had been transferred to his account.

Yes

p)

Check whether there are any disputed claims/pending claims?

Yes

II. INTEREST ON EMPLOYEES AND EMPLOYER S CONTRIBUTIONS Interest is calculated on the monthly a) Examine the method by which the rate of balances standing on the credit of the interest is arrived at(9.5% on PF deposits) employee b) Ensure that the rate is not in excess of the prescribed rate since any excess will be considered income for tax purposes. Since the interest is calculated by the PF authority & directly remitted to the employees PF account & therefore it is unable for us to check there personal accounts

c)

Examine the tax implications if it exceeds the prescribed rate. Ensure that the employer is advised for further action in respect of TDS aspects.

Pending: 1. Proof for due dates and calculation of PF, etc.. 2. Pending Claims

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Audit checklists

MAA Television Network Limited 2. Checklist on ESI

Praturi & Sriram

S.No 1

Particulars Is this establishment covered under the scope of ESI Act?(based on number of Employees)(excluding seasonal factories) Check whether the Registration Certificate obtained or not (If applicable)? If obtained what is the code allotted to the establishment? List of Workers/employees for whom ESI deposited (Regular + Casual +part time + temporary +contracted labour) and also list of employees to whom ESI is not applicable. (contracted labour: if organization is covered under ESI then ESI applicable to them also)

Yes/No/NA Yes

Remarks

Yes

Code allotted 52-20447-90 dated 18/1/2002 Principal employer D. Suresh Babu(verified Xerox copy) Employees whose gross salary is less than or equal to Rs.15000. Separate list is not maintained, ESI is deposited based on salary statements. So for the details of number employees and gross salaries, only proof is salary statement. They didn t obtain any declaration form from the employees but they obtain only Nomination form

Whether employers have obtained declaration form from the employees covered under the Act and is the same is submitted to the ESI Office Check the correctness of ESI Computation with respect to the percentages and also wage ceiling for coverage of employees. i.e. 1.75% of gross wages in case of employee contribution and 4.75% of gross wages in case of employer contribution and gross Wage ceiling for coverage of employees is Rs.15000 of gross salary Check the definition of salary for the purpose of calculation of ESI as per the ESI Act (Gross salary) Check whether the ESI amounts are deposited within the applicable due dates (i.e. 21st of next month and payment should be made through Cheque only)? Because the deduction is allowed to the deposits which are made Yes Yes

We observed that the calculations and maximum ceiling of gross wages for coverage are as per the Act.

Gross salary

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with in the due date. 8

MAA Television Network Limited

Praturi & Sriram

Is the employer maintaining prescribed records/registers namely, register of employees, the inspection book and the accident book. What are the steps taken by the employer in case of death of employee?

Yes

Though inspection note book is maintained no remarks are quoted in the book

In case of death of the employee, this establishment pays Rs.1500 towards funeral expenses Whenever accident takes place, employee is eligible to get the treatment expenses and surgery, etc.. at free of cost, only in ESI Hospitals No Because of Online payments they didn t have hard copies of the returns.

10

Whether employer has paid any compensation to the employee in case of accident suffered by employee?

11

When are the returns submitted by the employer? Check whether they are submitted within due dates? ( half yearly as April to Sept and Oct to Mar, within 42 days from the end of the half year period) Check the payment challans comparing with salary registers and also check whether there are any mathematical errors in it?

12

No mathematical errors were found, amounts appeared in the challans are matched with the salary registers.

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Audit checklists

MAA Television Network Limited 3. Check list on Bonus

Praturi & Sriram

S.No 1

Particulars Check the applicability of Payment of Bonus Act? Check whether the eligibility of employees (who had worked for more than 30 working days in that year and drawing wages less than or equal to Rs.10000 per month and bonus will be calculated on Rs.3500) and list out the Employees who are disqualified/ not eligible for Bonus. Check whether any employee had been paid less than minimum bonus (i.e. 8.33% or Rs.100 w.e.h.) as fixed by the Payment of bonus Act ? Check whether the salary amount taken for calculation is as per the definition of salary given in the Act or not?( i.e. Basic + DA+ food allowance) Check whether any employee had been paid more than maximum bonus (i.e. 20% of salary) as fixed by the Payment of Bonus Act ? Check whether the bonus is paid within the time prescribed in the Payment of Bonus Act? (within 8 months from the close of accounting year)

Yes/No/NA Yes

Remarks

Yes

No

Yes

Only Basic is taken as a form of salary for calculating bonus because D.A is not a part of their salary

No

Yes

As per this company s policy, last date for payment of bonus is September, i.e. within the period of due date for filing the Income tax returns.

Compare the employees list with the attendance register Check whether the company maintaining applicable Registers and Records

Yes

Yes

The records are presented before the officer (Smart core management services) and then they declare the allocable surplus ready for the distribution of bonus and then depending on the

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MAA Television Network Limited

Praturi & Sriram

allocable profit bonus is declared either 8.33% or 20% 9 Check whether the employer had filed annual returns or not?(i.e. within 30 days after the expiry of time limit specified for payment of bonus) Check whether all the branches & departments included for the purpose of calculating bonus (As per the act establishment includes all branches & departments where ever situated for the purpose of calculating bonus). Are there any employees who have been removed from the establishment due to riotous behaviour? If yes, is he paid bonus? ( As per the act he shouldn t be paid bonus) Check whether in any accounting year the employees have not been paid bonus. ( As per the act an establishment can avoid paying bonus to the employees if it has already paid any pooja bonus or customary bonus) No

10

Yes

11

No

12

No

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Audit checklists

MAA Television Network Limited 4. Checklist on Gratuity

Praturi & Sriram

S.No 1

Particulars Check whether the Payment of Gratuity Act is applicable or not? Check the eligibility of employee, also exemptions to whom that the eligibility criteria is not applicable?(who rendered service not less than 5 years) Check whether there is any employee who had paid more than the maximum limit (i.e. Rs.10lakhs) as prescribed in the Payment of Gratuity Act? Check whether any employee received any gratuity from the previous employer, and also check whether the current employer had considered this or not

Yes/No/NA Yes

Remarks

Yes

This establishment paid gratuity for the employees who had been in service for more than 5 years.

No

Reply from HR Executive is that they didn t ask any employee whether received any gratuity from the previous employer, as it is not necessary for us Yes Only basic (at the time of resignation) is considered as Salary for calculation of Gratuity

Check the calculation of Gratuity amount whether it is calculated as per the Act or not?(i.e. (Basic + DA) *15/26 *number of years of service) Check whether the applicable forms are submitted within the time specified in the Act or not? Check whether gratuity is paid within the time prescribed in the Act or not (30 days from the date of it becomes payable), list out the cases if not paid Check whether the employees where in continuos service for claiming gratuity. (As per the act an employee must be in service for not less than 240 days in an accounting year) Check whether the establishment has taken insurance in respect of employers

Yes

We observed that this establishment had taken insurance from LIC with

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MAA Television Network Limited

Praturi & Sriram

liability for payment of gratuity. (As per the act an establishment has to compulsorily prescribe an insurer for the employer s liability for payment of gratuity).

respect to the gratuity payable to the employees.

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Audit checklists

MAA Television Network Limited 5. Checklist on EDLI

Praturi & Sriram

S.No 1 2

Particulars Check the applicability of EDLI Scheme? Check whether any employee had been credited with the insurance benefit under EDLI Scheme? If yes, Check the computation of amount of Insurance benefit and also check whether he had fulfilled necessary formalities? (i.e. Insurance benefit is equal to the average balance to the credit of the deceased employee in the Provident Fund during the last 12 months, provided that where such balance exceeds Rs.35000 then insurance cover would be equal to Rs.35000 plus 25% of the amount in excess of Rs.35000 subject to a maximum of Rs.60000.) Check the contribution of employer? And also Check the amount on which employer contribution is calculated? Check whether the amount remitted to the family of employer is within the maximum limit of Rs.60000

Yes/No/NA Yes No

Remarks With effect from 01/06/2011

NA

NA

NA

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Audit checklists

MAA Television Network Limited 6. Checklist on Mediclaim

Praturi & Sriram

S.No 1

Particulars Check whether the employees opt for this Policy?

Yes/No/NA Yes

Remarks

Documents verified We verified the agreement copy between the two companies i.e. (Iifco tokio

If yes what are the conditions to be fulfilled by the employees to get the benefits of this Policy. And also check what is the sum assured for the employees in case of claim?

Employees who do not have the benefit of ESI can only be included in this scheme Sum assured is as follows: a) senior managers & above : 400000 b) Rest of the employees : 200000 Yes Contributions depends upon the benefits chosen by the employee The employees are given smart cards & during the time of necessity they can avail the benefit by using these cards Yes

Check whether there is any limit in terms of contribution towards this policy? Check the procedure to be followed at the time of reimbursement of the policy amount?

Check whether employer maintains suitable record regarding to the policy? Check whether is there any separate policies for senior citizens, etc..?

No

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Audit checklists

MAA Television Network Limited 7. Checklist on GPA

Praturi & Sriram

S.No 1

Particulars Check the applicability of GPA Policy?

Yes/No/NA Yes

Remarks But applicable only for employees who are on rolls

Check the Office working hours for the employees? Check the agreements between the insurance companies and the client? Check whether there are any conditions to get the policy amount to employee/family members of the employee?

Yes Agreement is between MAA TV & Oriental insurance company

Yes

1)In case of death of the employee the nominees should consult the employer & he can actually make an application for the sum assured Sum assured is as follows: Manager & above : 15lakhs Rest of the employees : 6lakhs 2)In case of disablement the employee will be paid Rs.5000 every week The present policy terms will be revised from 24/08/2011 Changes that would effect the policy are that the sum assured for junior level employees will increase from 6lakhs to 8lakhs

Check whether there are any modifications in the present policy terms, if yes check whether those changes are communicated with the employee?

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Audit checklists

MAA Television Network Limited 8. Checklist on Payroll

Praturi & Sriram

S.No 1

Particulars Is the payroll system adequately protected from any misuse/un authorised access?

Yes/No/NA Yes

Remarks With the help of thumbnail machines and its direct accessibility to the HR computers which are also protected with Pass words. These are the only controls for avoiding misuse/unauthorised access. Before introducing the thumbnail machines they were using swipe card machine. Swipe machine up to 23/5/2011 and from 24/5/2011 thumb nail machine

Is there any mechanism set up to prevent fictitious employees on the payroll system? Are payroll salary rates correct in relation to agreed pay scales/national rates, etc? Check whether payroll payment transactions (i.e. overtime, bonus, salary increases, etc.) adequately authorized (prior to data entry) and correctly entered?

Yes

Yes

Yes

Authorisation: Panel meeting consisting of Chairman, HR Managers, HOD s consent and finally BOD approval is required for authorisation of salary increments and bonus payments.

Check the internal controls levied by the management on the payroll process (including disbursement)? Check whether calculations relating to the statutory deductions are correct or not? Check whether the TDS deducted or not? If applicable Check whether that all the necessary taxation and other deductions are correctly accounted for and paid over to the relevant authorities? Check whether all holidays payments are

Yes

Yes

Yes

Yes

Yes

Mostly office boys/security work on

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MAA Television Network Limited

Praturi & Sriram

valid as per the company s policy and legislative requirements?

holidays and they are paid for those days.

10

Are payroll runs adequately reconciled to the accounting system and anomalies promptly identified and resolved? Check whether the payroll payments, automated fund transfer, salary cheques are adequately authorized or not? Check whether there are any payments (by mistake) made to the employees who had left the organization?

Yes

11

Yes

12

No

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Audit checklists

MAA Television Network Limited 9. Checklist on Shops & Establishment Act

Praturi & Sriram

S.No 1 2

Particulars Check the applicability of Act Check whether Registration certificate obtained within the time specified in the Act (i.e. within 30 days from the commencement of its works)? If applicable Check whether the opening and closing hours, intervals (and Holidays) for rest are as per Act or not? (i.e. Subject to other provisions of this Act, no employee in any shop shall be required or allowed to work therein for more than eight hours in any day and forty eight hours in any week and interval for rest of at least one hour) Check the provisions relating to women employees are followed or not? (i.e. maternity leave, etc..)

Yes/No/NA Yes Yes

Remarks

Yes

Yes

During maternity leave period the women employees are eligible to get an amount equal to 12 week salary. This amount can be claimed after joining back to the organisation

Check the provisions relating to overtime and the wages for overtime are followed or not? If yes, examine whether those excess hours are not more than 6 hours in a week and the wages for the overtime must be twice to the ordinary rate of wages. Check whether any employee was paid salary in advance and also examine the instalments for repayment of the same? (i.e. examine whether the conditions mentioned in the Act are fulfilled or not? (i.e. advance salary does not more than preceding 2 months salary and the number of instalments must be within 12 months )

NA

Yes

We observed that this company s policy is to allow the employees, advance salary of amount equal to one month gross salary, and it should be repaid within 5 instalments. For claiming advance salary the employee has to fulfil certain formalities i.e. he has to file an application form which has to be

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MAA Television Network Limited

Praturi & Sriram

duly authorised by concerned dept. head 7 Check whether there are any deductions for absent or for damage of loss and there are any fines applicable for the employees? In case an employee takes leaves in addition to what he is allotted then the organisation will deduct salary for those extra leaves or else the employees can compensate them by working on holidays

Check the terms relating to leaves/earned leaves and examine whether those are as per the provisions of the Act or not? (i.e. every employee who has served with 240 days or more during a continuous period of 12 months eligible for 15 days earned leaves, 12 sick leaves, 12 casual leaves. Check the conditions for terminating the employee from his service and the payments of Service Compensation for termination/resignation? Service compensation for termination amounting to 15days average wages for each year of continuous service provided employee has been in his employment continuously for a period of not less than one year. (service compensation is not applicable where the employee is entitled to gratuity) Check the conditions for terminating the service? (is there a valid reason for terminating) Check whether there is any bond period, if yes check whether any penalty is levied on employees who break the bond period? Check whether there is any condition to issue prior notice for leaving/terminating the job? Check whether the applicable records and registers are maintained or not? NA

Privileged leaves 25 per annum Out of these : Casual leaves-10 Earned leaves-15 In addition to this there are 7 sick leaves

Till now none of the employees were terminated by the organisation. It can terminate the employee only when he is a threat to the organisation.

10

11

NA

12

Yes

The employees have to give 30 days prior notice in case he is leaving the organisation

13

Yes

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Audit checklists

MAA Television Network Limited 10. Checklist on Car Policy

Praturi & Sriram

S.No. 1.

Particulars Check whether the car policy is applicable to all employees?

Yes/No/NA No

Remarks This policy is applicable based on the designation of the person. If designation is Asst General Manager and above. Effective date of the policy is 15/10/2010. Car policy amounts are changed based on the designation of the officers. i.e. refer Note 1 below

2.

Check whether the car policy amount is the same for all the eligible levels of officers

No

3.

Check whether the car is allowed to use for personal purpose? Check whether there is any particular procedure followed for reimbursement of car maintenance expenses?

Yes

Car is allowed to use for the purpose of the official duties. Conditions: 1. documentary proof i.e. bills 2. Time limit for submission of bills: With in 2 weeks from the date of incurring of expenses. 3. Maintenance expenses does not include Driver salary, petrol expenses. Car is purchased on lease basis from sundaram finance i.e. leasing company in the name of MAA TV . These lease rentals are borne by the company, employee need not to pay even single rupee for using the car, and he has to bear the driver & Petrol expenses.

4.

Yes

5.

Check on whose name car is registered?

6.

Check whether the car is insured or not? If yes, check Who has to bear the insurance charges?

Yes

Leasing company has to bear the insurance expenses

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Audit checklists

MAA Television Network Limited

Praturi & Sriram

Notes on car policy: 1.


Designation Assistant General Manager & Deputy General Manager General Manager, Sr. General Manager, Associate Vice President Vice President Terms & Conditions Minimum one year service NA Acquisition Cost of the Car Rs.600000 Annual maintenance reimbursement limit Rs.15000

Rs.900000

Rs.20000

NA

Rs.1200000

Rs.25000

2. On completion of 4 years of leasing tenure, employee has to purchase the car at the residual value, i.e. 20% of the Acquisition of Cost as per the company s policy. 3. If employee has an option to purchase the car, if he can purchase then company would pay 7.5% of the acquisition cost of the car as loyalty bonus. 4. If any employee who had opt this policy is resigned before completion of 4 years leased period then he has to pay an amount i.e. equal to market value of the car at the time of resignation after deducting the W.D.V. of the car on the date of resignation.

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