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Compliance Management

S. C SharmaRPFC

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Compliance Management

Basic Compliance Functions Managing Default Compliance Model 2001 Review of the Compliance 2001

Programme Changes envisaged

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Basic Compliance Functions Timely coverage of all coverable

establishments. Timely allotment of Code Number Timely enrolment of all eligible

employees to Provident Fund. Timely deduction and remittance of

dues Timely detection of default for recovery

and penal action. Timely levy of damages.

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Basic Compliance Functions

Timely grant of exemption. Timely inspection of

establishments. Timely action on legal matters. Infusing and sustaining hope,

faith and conviction in the minds of subscriber-members.

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Managing Default Determine the dues under Section 7A

of the Act. Realise Current Demand through

Section 8F Issue Recovery Certificates to the

Recovery Officer. In the case of default of employees’

share of Provident Fund contributions, action under Section 406/409 of Indian Penal Code.

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Managing Default Ensure visits by Enforcement Officer to the

defaulting establishments. 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.

Furnish the list of defaulters to the Income Tax authorities so as to enable them to examine the question of allowing relief, etc.

In genuine and deserving cases instalment facility be allowed to defaulting employers to clear the dues.

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Managing Default Recovery of interest under Section 7Q

of the Act. Levy of damages on all belated

payments Initiate action under Section 110 of

Code of Criminal Procedure, 1973 against habitual defaulters

Prosecution of defaulters, invoking Section 14 of the Act.

Display the list of highest defaulters

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Compliance Model 2001

Main Objectives what is claimed as establishments

brought under the purview of the Act are in effect brought under Compliance fold

what is claimed as members become contributing members and in their accounts contribution realised and interest thereon gets credited

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Strategy to achieve the objectives Compliance wings of the field offices

has been reoriented and restructured All enforcement functions have been

consolidated at the level of a Circle Officer (Assistant PF Commissioner)

Targets fixed for each Circle Officer-7A cases, recovery, enforcing compliance

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Strategy to achieve the objectives

Concept of area inspectors abolished

Focus on all non-complying establishments

System assisted default detection and monitoring of establishments

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Functional arrangement under the new compliance model Formation of circle and intelligence

circle Circle is headed by the Assistant

Commissioner Establishment falling in each circle

should be maintained Maintenance of centralized register

for covered establishment

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Functional arrangement under the new compliance model Maintenance of ‘History sheet in

respect of each establishment with reference to Form 5A, Bank accounts, default position, penal/legal action initiated etc.

Issue of letter allotting the Code No. of establishments within three days

Allotment of EPFO business number to each establishment

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Functional arrangement under the new compliance model Maintenance of Code number allocation

register 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

Register to watch the conduct of 7A enquiries tills the assessment of dues should be maintained.

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Functional arrangement under the new compliance model

Preparation of Annexure ‘A’ for Enforcement Officers

No Enforcement Officer is expected to visit the establishment without the authority letter

No regular inspection of establishments by the Enforcement Officer.

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Functional arrangement under the new compliance model

Registers to be maintained_ Recovery Register Register of Prosecution Register of Tribunal cases Register of 406/409 Register of Writ Petitions Register of BIFR cases Register of Attachment/Release of Properties Claim Petition Register Register on 8F cases Register on 110CrPC cases are

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Review of the Compliance 2001 Programme Chairman, CBT decided to review

the compliance policy An inspection exercise be carried

out in at least 1% of the establishment in all Regional and Sub-Regional Offices of EPFO

Suggested policy options to be placed before the CBT

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Review of the Compliance 2001 Programme Inspection was carried out during February

and March, 2006 through out the country Revealed that the compliance and

enrollment of membership has reduced considerably in pursuance to the Compliance 2001 Model

Significant mismatch between the actual subscriber strength and the reported subscriber strength of the establishments

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Review of the Compliance 2001 Programme

Sample analysis of collected data showed that compliance 2001 Model failed to achieve desired objectives “to arrest the rot”.

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Changes envisaged Sec. 7A enquiry may be redistributed

amongst APFC and RPFC-II Provisions of an independent

Intelligence Circle may be retained and it needs to be strengthened further with technological support and inputs

EOs to depose in Sec. 7A proceedings

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Changes envisaged Revision of targets- closing of 20 inquiries

per month in 7A cases and 40 in 14B cases The target of recovery of 90% of assessed

current dues in realizable categories can be retained

In case of closed/unrealizable categories, the recovery target should be lowered to 50% of the assessed current dues

No assessment on the basis of F12A only

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Changes envisaged Provisions for issuance of code number in

3 days to be reviewed Establishments to be allotted code number

only after due verification of employees strength and address of the employer

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

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Changes envisaged EOs not inspect any establishment without

proper authorization of circle officer 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

Periodical inspections should be reintroduced at least until a more effective automated monitoring system is introduced

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Changes envisaged

Inspection of exempted establishments should be assigned to RPFC

The Act should be amended suitably so as to introduce the appellate jurisdiction within the EPFO itself

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Thank you