Detailed Audit Observations

Human Resources & Payroll

1
1.1 Attendance & Leave Management Medium
Detailed Observation Implication
Observation- We reviewed the attendance & leave management  Non standardized system for attendance and leave
system in the organization and noted : tracking lead to mismanagement and inefficient
 Format of attendance and leave reports prepared and utilization of resources.
maintained by various locations across India are not  Different leave structure lead to more complexities
standardized in leave management and may lead to incorrect
 Different leave structure is followed at different locations with processing of salaries.
regard to annual entitlement and accumulation Recommendation
 A standardized system should be in place where
employees can access their attendance and leave
records. Also, employee should put a system
request for any leave required which should be
approved by the senior.
 Leave structure should be revised/standardized to
eliminate disparity.
Management Comments
We have different Brand’s bio-metric
machines at different locations and machines
produce reports in different formats.
Gradually we will buy all machines of one
brand.
However, we have circulated standard
attendance format to all centre HR SPOCs to
maintain monthly attendance manually in the
standard format.
1.2 Attendance Monitoring Medium
Detailed Observation Implication
Observation- We reviewed attendance records and observed  Improper attendance and leave monitoring may
certain cases of employees who didn’t punch their card at the lead to over/ under payment to employees.
time of leaving the office & employee who worked for less than
8.30 hours a day but marked present.
Recommendation
Refer annexure (As an attachment) :
 A standardized system should be in place where
a.) Less than Standard hours cases and employees can access their attendance records and
b.) No Out Punch cases can raise request for correction of records via
system itself.
 Employees spending less working hours in office
should be tracked and corrective actions should be
taken especially in case of employee having desk
job.

Management Comments

Editorial, Circulation and Sales employees

come to office for sometime and then they go
to market for their respective work. Some
employees forget to punch. We check with
them about the absences through mail.
The report presented is based on the
punching machine data which does not
include ODs, half day leaves and forgot
punch cases. We resolve these cases through
mail and mark attendance accordingly.
1.2 Biometric & Leave Record Maintenance Medium
Detailed Observation Implication
Observation- We reviewed attendance, leave & biometric  Improper attendance and leave monitoring may
record and noted : lead to over/ under payment to employees.

 Biometric system was not working at following location

during period of review:
• Kolkata- June,2016
• Gujarat- June & August ,2016 Recommendation
 Leave record at Lucknow locations is not prepared on month
 Annual Maintenance Contract should be done for
to month basis instead it is maintained on year to date basis
Biometric Systems.
and hence we were unable to perform review with regard to
leave taken by an employee during a particular month.  Monthly leave records should be prepared at all
locations.

Management Comments

Because of technical issues report was not be

pulled out from Biometric system at Kolkata
and Gujarat locations.

Attendance is maintained on attendance

register as a backup option.

For Lucknow, we will start maintaining

attendance on monthly format instead of
yearly basis.
1.4 Violation of provision of EPF & MP Act,1952 High
Implication
Detailed Observation
 Excess deduction from salary
Observation- We reviewed the EPF calculation and noted that  Violation of sec 2 (b) of the EPF & MP Act,1952 ,
Employee Share of EPF hasn’t been calculated in accordance as it specifically excluded Overtime Allowance
with the Employees’ Provident Funds And Miscellaneous from the definition of basic wage.
Provisions Act, 1952.  Since Trainees are Exempted employees and EPF
provision are not applicable on them as said by
 The employee Contribution is 12% of Basic only + D.A. , Apex court in one of his judgment.
whereas in identified cases over time allowance has also been  Saving in Cost of contribution made by Indian
taken for calculation of Employee PF share. express on account of PF.
• In addition to above we also noted cases where EPF has also
been deducted and contributed by Indian Express on Recommendation
Salary/stipend paid to Trainees appointed under various  Issue should be discussed with SGC Services and
department. corrective action should be taken immediately.
From the perusal of the offer letter given to trainees it is clear  No need to either deduct and contribute PF on
that they have been appointed as trainee not an employee as they salary/stipend payable to trainees.
were not entitled to other benefits/allowances as are applicable to
regular employees
Management Comments
Refer Attachment for full detail
1. EPF is calculated at 12% of Basic + DA
for all employees except Noida Sec- 7,
Wrong PF WB staff. They have been given special
deduction benefits of calculated PF on OT also.
2. The observation on PF for trainees has
been noted and we will discuss this with
legal department and revert.
Annexure : Violation of provision of EPF & MP Act,1952
Following are the sample cases where PF was deduct on Overtime
                As per SGC As per Law
Computation
 
E.code Month NAME Basic DA Arrear Overtime GrossSalary EMP_PF @ 12% of 12% of Basic + Excess
of salary Gross Salary D.A. + Arrear Deduction
of salary

001121 Aug'16 Sudhir Kr Sharma 19900.00 9265.00 0.00 1826.67 30991.67 3719.00 3499.80 219.20
000865 Aug'16 Arjun Kumar Sinha 17200.00 8008.00 0.00 3158.67 28366.67 3404.00 3024.96 379.04
000484 Aug'16 Jagannath Pathak 21385.00 9957.00 0.00 3924.67 35266.67 4232.00 3761.04 470.96
000487 Aug'16 K. N.Choudhary 21385.00 9957.00 0.00 3924.67 35266.67 4232.00 3761.04 470.96
000500 Aug'16 Milap Chand 21385.00 9957.00 0.00 2949.67 34291.67 4115.00 3761.04 353.96
000505 Aug'16 Hara Lal Talukdar 21385.00 9957.00 0.00 3924.67 35266.67 4232.00 3761.04 470.96
000485 Aug'16 Shyama Nand Karna 21385.00 9957.00 0.00 3924.67 35266.67 4232.00 3761.04 470.96
000860 Aug'16 Nand Kishore 15152.00 7060.00 0.00 2829.67 25041.67 3005.00 2665.44 339.56
000870 Aug'16 Yamuna Singh 14406.00 6729.00 0.00 2831.67 23966.67 2876.00 2536.20 339.80
000388 Aug'16 Om Shanker Sharma 6140.00 3097.00 0.00 2913.00 12150.00 1458.00 1108.44 349.56

Following are the sample cases where PF was deduct on Trainee Salaries/Stipend
EMPCO Month Designation GrossSa PF
DE & year NAME Location Department Description Category lary Dedu
TRAINEE
070515 Aug'16 ABHERI RAYCHAUDHURI AHMEDABAD THE FINANCIAL EXPRESS CORRESPONDENT JOURNALIST 19160 840
TRAINEE
068524 Aug'16 RAHUL PRAVIN THEKDI NARIMAN POINT THE FINANCIAL EXPRESS CORRESPONDENT JOURNALIST 26398 1260
TRAINEE
068527 Aug'16 NEHA A KULKARNI NARIMAN POINT THE INDIAN EXPRESS CORRESPONDENT JOURNALIST 26398 1260
TRAINEE
068430 Aug'16 PAVAN KUMAR BURUGULA NARIMAN POINT THE FINANCIAL EXPRESS CORRESPONDENT JOURNALIST 19160 840
TRAINEE
068479 Aug'16 RADHIKA SINGH NARIMAN POINT THE INDIAN EXPRESS CORRESPONDENT JOURNALIST 26398 1260
TRAINEE
006088 Aug'16 SAKSHI DAYAL NOIDA - B1 THE INDIAN EXPRESS CORRESPONDENT JOURNALIST 26398 1260
1.4 Incorrect HRA Calculation High
Detailed Observation Implication
Observation- We reviewed the Investment Register of both  Incorrect calculation of HRA and taxable salary
June & August’ 2016 it has been observed that SGC has done leading to non compliance with Income Tax Act.
wrong calculation of HRA .

We observed that in one case SGC has taken incorrect amount of

actual rent while computing HRA calculation.
Recommendation
We further noted two cases (Employee Code: 037855 & 100149),
where Nil rent is mentioned in investment but salary sheet is  Issue should be discussed with SGC Services and
reflecting the rent amount. corrective action should be taken immediately.
 Timely fresh declaration should be taken from
employees annually.
Also, in case no fresh declaration given by employees regarding
rent, information mentioned in Investment Register for previous
year is followed.
Management Comments

Some of the employees get their HRA

declaration updated over the phone to SGC.
We will ask SGC to take such request in
writing and also take investment declaration
on ESS portal in the beginning of the
financial year.
1.5 Weak controls over employee documentation Medium
Detailed Observation Implication
Observation- We noted that out of 25 samples selected, in case  Incorrect calculation of HRA and taxable salary
of following employees, contracts were not available for review : leading to non compliance with Income Tax Act.

E Code Name

36746 M. Sarita Varma

Recommendation
3931 Esha Roy
 Issue should be discussed with SGC Services and
68097 Sunil S Wariar corrective action should be taken immediately.
 Timely fresh declaration should be taken from
47894 Suhas Suresh Rao employees annually.
Also, we noted following discrepancy in employee master with
regard to date of joining when checked from employment
contract: Management Comments

E Code Emp. Name As per As per M. Sarita Verma, Sunil Warior and Suhas
employee agreement Rao’s contract - Received & verified by
Master Auditor
5000 Hare Krishan Shukla 06-Jan-10 14-Sep-10 Esha Roy’s contract will be provided.

4974 K G Narendranath 21-Oct-09 14-May-10 KGN & Hare Krishan Shukla – The DOJ is
correct as per the contract & shown to
Auditor. There was some confusion about
contract date and contract start date.
Thank You!

Manchanda & Manchanda

Chartered Accountants