For Audit Purpose Can My Company Show Some Number Of Workers On Payroll Tempararyly?

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

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

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?????

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.

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

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

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?

• 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

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

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