Psdhingra
Legal Analyst, Hrm
R.N.Khola
Labour Laws & Ir
Vkokamthankar
Asst. General Manager - Hr
Ravi12345
Licensing Of All Acts Across Pan India &
+2 Others

Thread Started by #somwanshi aarti

Dear all,
As there is a audit , my boss is asking me to add some workers on payroll tmparary.
I want to know is it possible to show sombady on payroll temparary?
is there any law any act which is mentioning this ?
If i will show someone on payroll but temparary how should i tell this thing to to that person that he is temparary on payroll?
Please guide me as soon as possible.......
Thanking you in advance.
AARTI
3rd June 2010 From India, Pune
Hi Aarti,
No you should not, if it is a quality audit they will ask for personal files, training record etc., some times they wants to interact one to one basis with the employee, they will verify the gate in and out regisers also hence better not to. - kamesh
3rd June 2010 From India, Hyderabad
Dear Kraos,
my boss said it is possible as big companies like Mahindra & Mahindra, Bajaj auto,they put their temparary employee on payroll, and pay their ESIC,PF etc. for few months and then again give them break.
is it true or else whats the case?????
3rd June 2010 From India, Pune
It depend's on wat type of Audit you are going to face.
If you go head as per your Boss advice take a approval in mail to do this activity as you will be safe if anything goes wrong further.
A Professional statutory auditor can immediately give is negative opinion by seeing ur record's if he is intelligent.
As i have lot of experience in my professional day to day Statutory Audit activity ,we have screwed lot of organization.
4th June 2010 From India, Mumbai
hi,
I am been following the thread. I have some things to add.
Som u dont need to worry abt the approval from ur boss bcoz in case of qualification in audit report, its the Head of dept who is responsible and not the process owner. R U the head of dept.? if not then...........
Secondly, in auditors report there is no were where u mention the number of employees.
Warm Regards,
Ca Vikas Goel
4th June 2010 From India, Mumbai
I can understand your position, as some times, some confident employees of the management have to do illegal and unethical acts to please the management in any organization.

Of course, every thing is possible in illegal and unethical way at your own risk and responsibility, if you want to please the management and to save your position. But, while you will be directly responsible to the management, Directors will be responsible to the auditors and shareholders for all such illegal and unethical acts.

The question arises, who will receive the payment on behalf of that temporary establishment? Further, will that amount go to the pockets of the Directors or to grease the palm of audit?

HOWEVER, it will be--

(1) wrong ethically for you and the management;

(2) against Corporate Governance;

(3) illegal for the Tax point of view;

(4) illegal under company law;

(5) Dishonest move from the point of view of shareholders and other stakeholders.


PS Dhingra
Vigilance & Transformation Management Consultant
Dhingra Group of management & Educational Consultants
New Delhi



5th June 2010 From India, Delhi
Dear Vikas,
Your views of course are quite right so far as the responsibility of directors is concerned, but do not seem to reflect legal aspects, where the member has also asked whether that type of act is provided or not in any law.
Hope you may like to see my views just after yours, and being a CA, would you like to give your views about my comments, as to what extent I am wrong or right?


5th June 2010 From India, Delhi
  • Your query is not clear and you will get right advise provided you give all information.
  • What kind of Audit is this? Statutory A/c Audit, Internal Audit, Quality Audit, Process Audit, ISO Audit, Vendor Audit ???? Who is going to be auditors???
  • Why your boss wants to add some people on Payroll? Is it to just show more number of employees on the rolls or it is to fictitiously inflate employee cost???
  • Technically and legally adding any number of employees on the roll and may be removing them from the roll after some days, stating that they left or resigned is not at all a problem. But mind you, you are creating a fictitious record, which is illegal and unethical.
  • You have quoted examples of Bajaj and M & M, yes they do take temporaries on roll. But they are real temporaries, they are recruited for the period of 6 months, they are issued appointment letters and relieving letters, they are paid salary regularly and all legal compliances are perfectly followed. Unlike your case they are not fictitious.
  • In case You respond you will get better and complete reply.
Thanks & regards


5th June 2010 From India, Pune
Dear Dinghraji,
I agree with what u said. But I feel that the temperory staff discussed above is FTC, in which case it has to be included in the number of employees. Further, I feel one should understand the purpose of the information asked by the auditors.
Also, Number of employees is used for the purpose of determining salary for statuturoy auditors. If the Company/Employee gives incorrect details it can be very well identified by auditors by reviewing PF, ESCI, Gratuty calculations.
Some companies dont make the staff permanent but keep on extending the contract for 1 year.(FTC) which shoud be considered in the employee count.
Warm Regards,
CA Vikas Goel
5th June 2010 From India, Mumbai
No itx wrong..you cant do this..if the auditor ask to show personal files of these employees then what will you do??
on non-availability of these file, your company's certification may be canceled
5th June 2010 From Pakistan, Karachi
Dear all,
I have another Query. if i will add these workers on the payroll temparary, do i have to pay them PF,ESIC,Gratuity etc?......And after 3-4 months if i will give them break, am i responsible to pay them all these contribution?(as some part of contry will get cut from these workers payment also).....if sombady claim all this contrybution shall i have to be responsible to pay them?
5th June 2010 From India, Pune
Hi,
If it is on Fixed term contract then the Company is responsible. If there is contact then contractor is responsible for payment and the Company needs to take adequate care that the contractor has made payment of stat dues.
Under Contract labour law, firstly contractor is responsibe for payment of stat dues and if the contractor doesnt pay then Principal is responsible., which mean for the contractor doesnt comply then the Company will be liable for payments.
Warm Regards,
Ca Vikas Goel
5th June 2010 From India, Mumbai
Dear Vikas,

Thanks for your clarification. But, it seems the information provided by the poser of the problem was quite inadequate, from which a clear inference can well be made that some fictitious recruitment has been asked to be shown as a malpractice by the management just to siphon out funds of the company for illegal purposes. Had that not been the situation, the author of the thread could not have any cause of worry on her part. You would like to appreciate that there is much difference in the acts of showing and making actual recruitment of temporary staff. What I presume that she had the fear in her mind of showing some artificial staff temporarily without making any recruitment for those positions.

To be frank, I have seen in some companies/corporations the management adopts such type of tactics, either to illegally fill their own coffers or to grease the palm of the auditors, when auditors' compensation is either inadequate, or is desired much more than the approved one, or even to evade tax to show some fictitious profits or to negate some loss in loss making companies. I have also seen, the management adopts such tactics by employing auditors' own articles or the audit clerks or kith and kin by showing having engaged through some other associate audit companies to assist and justify the needs of the auditors to avoid any complex and odd situation likely to arise and to avoid facing the ire of the shareholders, if anything untoward appears in the audit report.

Sorry for my frank discussion. Hope, being a CA, you would also be aware of such type of situations and would not mind for my discussion on the issue.



PS Dhingra

Vigilance & Transformation Management Consultant

Dhingra Group of management & Educational Consultants

New Delhi


6th June 2010 From India, Delhi
Dear Arti, If these workers are so important then pay the amount of contribution of both the sides from your own pocket. You can not add this amount in their wages/ salaries. Regards, R N KHOLA
7th June 2010 From India, Delhi
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