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Compliance Management Session One


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Compliance Management Session One

  1. 1. Compliance Management S. C Sharma RPFC
  2. 2. Compliance Management <ul><li>Basic Compliance Functions </li></ul><ul><li>Managing Default </li></ul><ul><li>Compliance Model 2001 </li></ul><ul><li>Review of the Compliance 2001 Programme </li></ul><ul><li>Changes envisaged </li></ul>
  3. 3. Basic Compliance Functions <ul><li>Timely coverage of all coverable establishments. </li></ul><ul><li>Timely allotment of Code Number </li></ul><ul><li>Timely enrolment of all eligible employees to Provident Fund. </li></ul><ul><li>Timely deduction and remittance of dues </li></ul><ul><li>Timely detection of default for recovery and penal action. </li></ul><ul><li>Timely levy of damages. </li></ul>
  4. 4. Basic Compliance Functions <ul><li>Timely grant of exemption. </li></ul><ul><li>Timely inspection of establishments. </li></ul><ul><li>Timely action on legal matters. </li></ul><ul><li>Infusing and sustaining hope, faith and conviction in the minds of subscriber-members. </li></ul>
  5. 5. Managing Default <ul><li>Determine the dues under Section 7A of the Act. </li></ul><ul><li>Realise Current Demand through Section 8F </li></ul><ul><li>Issue Recovery Certificates to the Recovery Officer. </li></ul><ul><li>In the case of default of employees’ share of Provident Fund contributions, action under Section 406/409 of Indian Penal Code. </li></ul>
  6. 6. Managing Default <ul><li>Ensure visits by Enforcement Officer to the defaulting establishments. </li></ul><ul><li>Furnish the list of defaulters to the Banks so as to insist clearance certificate on Provident Fund and other dues before considering sanction of loans/advances to the establishments. </li></ul><ul><li>Furnish the list of defaulters to the Income Tax authorities so as to enable them to examine the question of allowing relief, etc. </li></ul><ul><li>In genuine and deserving cases instalment facility be allowed to defaulting employers to clear the dues. </li></ul>
  7. 7. Managing Default <ul><li>Recovery of interest under Section 7Q of the Act. </li></ul><ul><li>Levy of damages on all belated payments </li></ul><ul><li>Initiate action under Section 110 of Code of Criminal Procedure, 1973 against habitual defaulters </li></ul><ul><li>Prosecution of defaulters, invoking Section 14 of the Act. </li></ul><ul><li>Display the list of highest defaulters </li></ul>
  8. 8. Compliance Model 2001 <ul><li>Main Objectives </li></ul><ul><li>what is claimed as establishments brought under the purview of the Act are in effect brought under Compliance fold </li></ul><ul><li>what is claimed as members become contributing members and in their accounts contribution realised and interest thereon gets credited </li></ul>
  9. 9. Strategy to achieve the objectives <ul><li>Compliance wings of the field offices has been reoriented and restructured </li></ul><ul><li>All enforcement functions have been consolidated at the level of a Circle Officer (Assistant PF Commissioner) </li></ul><ul><li>Targets fixed for each Circle Officer-7A cases, recovery, enforcing compliance </li></ul>
  10. 10. Strategy to achieve the objectives <ul><li>Concept of area inspectors abolished </li></ul><ul><li>Focus on all non-complying establishments </li></ul><ul><li>System assisted default detection and monitoring of establishments </li></ul>
  11. 11. Functional arrangement under the new compliance model <ul><li>Formation of circle and intelligence circle </li></ul><ul><li>Circle is headed by the Assistant Commissioner </li></ul><ul><li>Establishment falling in each circle should be maintained </li></ul><ul><li>Maintenance of centralized register for covered establishment </li></ul>
  12. 12. Functional arrangement under the new compliance model <ul><li>Maintenance of ‘History sheet in respect of each establishment with reference to Form 5A, Bank accounts, default position, penal/legal action initiated etc. </li></ul><ul><li>Issue of letter allotting the Code No. of establishments within three days </li></ul><ul><li>Allotment of EPFO business number to each establishment </li></ul>
  13. 13. Functional arrangement under the new compliance model <ul><li>Maintenance of Code number allocation register </li></ul><ul><li>The services of the Enforcement Officer should not be utilized for filing deposition, presenting the case during enquiry Under Section 7A, except in case of absolute necessity </li></ul><ul><li>Register to watch the conduct of 7A enquiries tills the assessment of dues should be maintained. </li></ul>
  14. 14. Functional arrangement under the new compliance model <ul><li>Preparation of Annexure ‘A’ for Enforcement Officers </li></ul><ul><li>No Enforcement Officer is expected to visit the establishment without the authority letter </li></ul><ul><li>No regular inspection of establishments by the Enforcement Officer. </li></ul>
  15. 15. Functional arrangement under the new compliance model <ul><li>Registers to be maintained_ </li></ul><ul><li>Recovery Register </li></ul><ul><li>Register of Prosecution </li></ul><ul><li>Register of Tribunal cases </li></ul><ul><li>Register of 406/409 </li></ul><ul><li>Register of Writ Petitions </li></ul><ul><li>Register of BIFR cases </li></ul><ul><li>Register of Attachment/Release of Properties </li></ul><ul><li>Claim Petition Register </li></ul><ul><li>Register on 8F cases </li></ul><ul><li>Register on 110CrPC cases are </li></ul>
  16. 16. Review of the Compliance 2001 Programme <ul><li>Chairman, CBT decided to review the compliance policy </li></ul><ul><li>An inspection exercise be carried out in at least 1% of the establishment in all Regional and Sub-Regional Offices of EPFO </li></ul><ul><li>Suggested policy options to be placed before the CBT </li></ul>
  17. 17. Review of the Compliance 2001 Programme <ul><li>Inspection was carried out during February and March, 2006 through out the country </li></ul><ul><li>Revealed that the compliance and enrollment of membership has reduced considerably in pursuance to the Compliance 2001 Model </li></ul><ul><li>Significant mismatch between the actual subscriber strength and the reported subscriber strength of the establishments </li></ul>
  18. 18. Review of the Compliance 2001 Programme <ul><li>Sample analysis of collected data showed that compliance 2001 Model failed to achieve desired objectives “to arrest the rot”. </li></ul>
  19. 19. Changes envisaged <ul><li>Sec. 7A enquiry may be redistributed amongst APFC and RPFC-II </li></ul><ul><li>Provisions of an independent Intelligence Circle may be retained and it needs to be strengthened further with technological support and inputs </li></ul><ul><li>EOs to depose in Sec. 7A proceedings </li></ul>
  20. 20. Changes envisaged <ul><li>Revision of targets- closing of 20 inquiries per month in 7A cases and 40 in 14B cases </li></ul><ul><li>The target of recovery of 90% of assessed current dues in realizable categories can be retained </li></ul><ul><li>In case of closed/unrealizable categories, the recovery target should be lowered to 50% of the assessed current dues </li></ul><ul><li>No assessment on the basis of F12A only </li></ul>
  21. 21. Changes envisaged <ul><li>Provisions for issuance of code number in 3 days to be reviewed </li></ul><ul><li>Establishments to be allotted code number only after due verification of employees strength and address of the employer </li></ul><ul><li>EOs to be given specific geographical area and be held accountable for evasion or non-coverage of the establishments or membership and also for the recovery of the PF dues </li></ul>
  22. 22. Changes envisaged <ul><li>EOs not inspect any establishment without proper authorization of circle officer </li></ul><ul><li>EOs may be allowed to visit the establishments falling within his jurisdiction solely for the purposes of recovery etc. and for gathering information and to look into coverage potential </li></ul><ul><li>Periodical inspections should be reintroduced at least until a more effective automated monitoring system is introduced </li></ul>
  23. 23. Changes envisaged <ul><li>Inspection of exempted establishments should be assigned to RPFC </li></ul><ul><li>The Act should be amended suitably so as to introduce the appellate jurisdiction within the EPFO itself </li></ul>
  24. 24. Thank you