CS VINAYAK S. KHANVALKAR Partner KANJ & Associates, Pune ... AUDIT _PPT_VSK_final.pdf · The Air (Prevention and Control of Pollution) Act, 1981 as amended up to 1987/ Rules, 1982

CS VINAYAK S. KHANVALKAR Partner

KANJ & Associates, PuneCompany Secretaries

[email protected]

(vi) ------------------------------------(Mention the other laws as may beapplicable specifically to the company)

Laws specifically applicable

How do we interpret it ?

Mandate from the board required ? Fees commensurate with the mandate?

Laws which are applicable or not, how to decide that ?

For example:

Taking a example of a particular manufacturing unit laws which maybe applicable are defined as below -

Manufacturing Unit

The Air (Prevention and Control of Pollution) Act, 1981 asamended up to 1987/ Rules, 1982

The Water (Prevention and Control of Pollution) Act, 1974, asamended 1988 / Rules, 1975

The Water (Prevention and Control of Pollution) Cess(Amendment) Act, 2003 / Rules, 1978The Environment (Protection) Act, 1986, amended 1991/Amendment Rules, 2003/ Environmental Impact AssessmentNotification, 1994 as amended, 2004Noise Pollution (Regulation and Control) Rules, 2000The Hazardous Waste (Management & Handling) Rules1989, asamended in 2003

The Explosives Act 1884 & Rule 1983, Amendment Rule 2002

The Electricity Act 2003, r/w Electricity rules 2005 and the Intimationof Accidents (Form and Time of Service of Notice) Rules, 2004.The Factories (Control of Industrial Major Accident Hazards) Rules,2003 [Refer the Foot Note]

The Petroleum Act 1934 as amended in 1977 & Rule 2002

Ozone Depleting Substance (Regulation & Control) Rules 2000Batteries (Management & Handling) Rule 2001The Bio Medical Wastes (Management & Handling) Rules, 2000Gas Cylinders Rules, 2004The Static and Mobile Pressure Vessels (Unified) Rules, 1981 asamended in 2000

Labour LawsApprentices Act 1961 r/w Apprenticeship Rules 1962The Collection of Statistics Act, 1953 r/w Collection of Statistics(Central) Rules, 1959The Contract Labour (Regulation and Abolition) Act, 1970The Employment Exchanges (Compulsory notifications of Vacancies)Act, 1952 r/w The Employment Exchanges (Compulsory Notificationsof Vacancies) Rule, 1960The Equal Remuneration Act, 1976 r/w Equal Remuneration Rules,1976Employees State Insurance Act, 1948 r/w Employees State Insurance(General) Regulations, 1950 and Employees State Insurance (General)Rules, 1950Factories Act, 1948

The Employees Provident Funds And Miscellaneous ProvisionsAct, 1952 along with the Central Scheme, 1952Payment of Bonus Act, 1965 r/w Payment of Bonus Rules, 1975The Payment of Gratuity Act, 1972 And Payment of Gratuity (Central)Rules, 1972.Payment of Wages Act, 1936The Industrial Employment (Standing Order) Act, 1946 r/w IndustrialEmployment( Standing Orders)(Central) Rules,1946Industrial (Development and Regulation) Act, 1951 r/w theRegistration and Licensing of Industrial Undertakings Rules, 1952Workmen’s Compensation Act, 1923 r/w The Workmen’sCompensation Rules, 1924 and Workmen’s Compensation Returns,1935Weekly Holidays Act, 1942

Labour Laws (Exemption From Furnishing Returns andMaintaining Registers by Certain Establishments) Act, 1988

The Maternity Benefit Act, 1961

The Minimum Wages Act 1948

Office Laws

The Bombay Shops And Establishments Act, 1948 AndMaharashtra Shops And Establishments Rules, 1961

The Industrial Employment (Standing Orders) Act, 1946 R/W TheBombay Industrial Employment (Standing Orders) Rules, 1959

The Collection of Statistics Act, 1953, Collection of Statistics (Industrialand Labour Dispute) Rules, 1968, Collection of Statistics (WorkStoppage resulting from Industrial and Labour Dispute) Rules, 1968

The Bombay Labour Welfare Fund Act, 1953 And Rules Thereto AndBombay Labour Welfare Fund Amendment Act, 2003

The Maharashtra Workmen’s Minimum House-Rent Allowance Act,1983 And Rules

Pre Audit Documentation

Exhaustive check lists to be prepared

Look for the routine compliances

Look for the orders of competent authorities requiring thecompanies to comply with certain requirements

Compliance with the procedures is equally important

Pre Audit Documentation

Make a list of statutory provisions applicable to the auditee company

Make a list of good corporate practice followed by auditee company

Make a list of all applicable laws which may be industries specific likeinfrastructure companies, pharmaceutical companies, manufacturingunits, Non banking financial Companies, etc.

Compliance Requirements

An application for [ Section 21(1) ]

consent to operate any industrial plant in an air pollution controlarea (for existing ), or;

consent to establish (for new or any expansion, in future) from theState Pollution Control Board (SPCB).

Apply for renewal of consent to operate.

Furnishing, of information - State Board and other agencies - in caseof excess emissions or accidental release. [Section 23]

Comply with the conditions of the consent from (SPCB) [Section21(5)]


An application for consent of the SPCB to operate for discharge oftrade effluent.

Apply for renewal of consent to operate – {Sections 25, 26 and Rule32}

Furnishing of information regarding - due to accident or otherunforeseen act or event to the SPCB - {Section 31}

Comply with directions issued by SPCB - {Section 33A}


Furnishing of water cess returns to SPCB, {Section 5 and rule 4}

Due date

On or before the 5th of every calendar month – Form I


Furnishing of information to State Board and other agencies in caseof excess emissions or accidental release - Section 9 and rule 12

Section 9 and rule 12

Submission of environment statement to SPCB for last financialyear - On or before the 30th day of September every year,beginning 1993 – Form V

Obtain prior environmental clearance from the Secretary, theMinistry of Environment and Forests (MOEF), New Delhi, in case ofnew projects or modernization/ expansion project


Ambient air quality standards in respect of noise shall be specified in the schedule annexed to these rules - Rules 3(1) and 4(1)

Noise levels in any area/zone shall not exceed the ambient air quality standards in respect of noise as specified in the Schedule


Obtain authorization from SPCB before starting handling ofhazardous wastes –

Form 1 ( while applying for the first time)

Apply for renewal of authorization – Form 1 (Before expiry of and asrequired under the existing authorization)

Ensure compliance of hazardous waste manifest, comprising of colorcode – Form 9 (During transportation of hazardous wastes)

Ensure compliance of Transport Emergency Card (TREM Card) -Form 10 (During transportation of hazardous wastes)

Maintain record of hazardous waste generation at site – Form 3

Submit return to the SPCB regarding disposal of hazardous waste –Form 4 - Annually

Submit return regarding auction/ sale of waste/ used oil/ waste oil to the SPCB – Form 13 (By 31st January of every year)

Reporting of accident occurred while handling hazardous waste to SPCB – Form 5 - immediately

Registration and renewal of registration of recyclers and re-refiners -Form 11 – renewal date is two months before the expiry of the registration


Take out insurance policy against the liability - Before startinghandling hazardous substances

Get the insurance policy renewed – Renewal Date- Within thevalidity period of that policy


Every vehicle after expiry of period of 1 year from the date of firstregistration, shall carry a valid “PUC certificate” (Pollution underControl)

(applicable to company owned vehicles)

Renewal Date

Six months from the date of expiry or as may be prescribed by the State Govt.

General / Routine Compliances –(Non mandatory checking)

Company has complied with the provisions pertaining to

renewal of insurance policies,

pollution control certificates,

fitness certificate and

renewal of permit

Maintenance program of the vehicles of the Company is designed by company or not

What about the vehicles sold by the Company ?

What about the insurance on such vehicles ?

What about the transfer formalities regarding the registration card of the vehicle & all ?

What about the renewal of the licenses of the drivers of the company driving the vehicles of the Company ?

Compliance Requirements Obtain authorization for possession and use of explosives- Section 5,

Rule 113 & 154(5) – Form 5 & 6 - before possession / use ofexplosives

Obtain renewal of authorization - Rule 165(4) – Form 13 renewaldate as mentioned in the initial licence

Obtain license to transport the explosive by road van - Rule 154(6) –Form 7 - before transportation of explosive

Maintain up-to-date record - Rule 119

Notify accidents to CCE (Chief Controller of Explosive) - Sections 8(1) & R 182– Within 24 hours

Obtain license for transportation of explosives from CCE - Rule 154(7) – Form 8

Obtain license for shot firer’s permit - Rule 154(8) – Form 9

APPLICABILITY

It is a statutory obligation of every industry/establishment havingtraining facilities according to syllabus in a designated trade under theApprentices Act, 1961 to train a number of apprentices according toratio of the trade in their establishment


Index Card to be made for the trainee – Form App 2 - one copy to be submitted to the authority within 15 days - Section2 r/w Rule 14(10)

Contract of training to be submitted to the concerned authority -Section 3 r/w Rule 14 (3) - Format I in Schedule III along with a forwarding letter in Format- IA in Schedule III

If a contract is terminated for failure on part of the employer, the employer shall pay the compensation to the apprentice - Section2 r/w Rule 8


Work diary shall be maintained by each trade apprentice and countersigned by his supervisor - Section2 r/w R14 (4) – Once a week – Format 2

Employer shall furnish eligibility certificate in respect of the eligible trade apprentices- Section2 r/w Rule 14(6) (c) - Form 4 in Schedule II - 15 days prior to the commencement of All India Trade Test

Particulars of such apprentices who satisfy the minimum conditions of eligibility to be submitted with the concerned authorities -Section2 r/w Rule 14(6) (a) - Form 3 in Schedule III


Half Yearly report to be submitted to the concerned authority -Section2 r/w Rule 14(7) – Form App 1

In case of graduate, technician or technician (vocational) - employershall maintain a record of work - shall send to Director quarterly –Regional Board of Apprenticeship Training - Section2 r/w Rule14(11) - Form Apprenticeship 3 in Schedule III - At the end ofeach quarter

Every employer shall maintain a register of attendance of the tradeapprentices - Section2 r/w Rule 14(5) - At the end of each month

General / Routine Compliances

Provide the apprentice with training in his trade in accordance withAct and rules

Ensure that a qualified person is placed in charge of the training

Carry out obligation under the contract

Registration of contract of apprenticeship

Payment of stipend to every trainee

Ensure health, welfare and safety of every trainee


Appropriate government may direct the factory/establishment toprovide statistics on the matters which may relate to welfare oflabour and conditions of labour –

Section 3 r/w Rule 4 – Such details are to be provided in the form ofreturns

Applicability Applicable to

every establishment in which 20 or more workmen are employedor were employed on any day of the preceding twelve months ascontract labour.

every contractor who employs or who employed on any day of thepreceding twelve months twenty or more workman.

Note: Not applicable to: Establishment which carry on work of a casualnature occasionally.


Application to be made by principal employer for registration ofthe establishment made to the registering officer of the area inthe prescribed manner - Section 7

Application for license to be made by the contractor in the formatprescribed - Section 12

Contractor has to provide various facilities such as

drinking water,

canteen,

rest rooms,

first aid boxes,

toilets etc.

to his workers, where the work is likely to go on beyond a period ofsix months - Section 16 – 20


Wages to contract labour should be paid before the expiry of thewage period - Section 21

Principal employer has to ensure the presence of his authorizedrepresentative at the place and time of wage disbursement - Section21

A notice showing the wage period and place and time ofdisbursement of wages shall be displayed at the work place -Section 21

Principal employer and every contractor shall maintain suchregisters and records giving particulars of contract labour employed -Section 29


Every contractor has to obtain a valid license

Effect of non-registration: The principal employer cannot employcontract labour in establishment

Obligation to provide certain amenities:

Provision of canteens

Rest Rooms

Drinking water and other facilities like latrines and urinals

First-aid facilities

Crèches

Maintenance of Records:

Half yearly Return in duplicate within 30 days by contractor

Register of Contractor - maintained by Principal employer for each establishment

Contractor to issue an employment card to each worker within 3 days of employment

A service certificate in case of termination of workman

A muster roll - register of wages - deduction for damages - register offines - register of advances - register of overtimes


Every employer shall maintain a up to date register in relation to theworkers –

Section 5 r/w Rule 6 – Form D


No Employer shall pay to any worker at rates less favourable thanthose at which remuneration is paid by him to the workers of theopposite sex for performing the same work or work of a similarnature.

No employer for complying above provision reduce the rate ofremuneration.

No discrimination while recruitment against women except wherethe employment of women is prohibited or restricted under any law.

Maintenance of Register: in form no. D relation to the workers employed.


Employer shall apply for registration to the appropriate RegionalOffice of the factory/ establishment within 15 days of theapplicability of the Act- Section2A r/w Regulation 10 – Form 01 -within 15 days of the applicability of the Act

The act shall apply to every employee whose wage are above theprescribed limit in the Act - Section 2

Submission of annual information (w.e.f. 1/01/2005) - by 31st

January every year - Regulation 10C – Form 01A

Employer shall pay the contribution in respect of each wage periodwithin 21 days of the last day of the calendar month - Section 39(4)read with Regulation 31

Every employer shall submit a Return of Contribution inquadruplicate to the appropriate office by registered post -Section40 r/w Regulation 26 - Form 5 - within 42 days of thetermination of contribution period



Employer shall maintain a bound inspection book and shall beresponsible for its production on demand by the inspector - Section45 (Regulation 102A) - For a period of 5 years from the date oflast entry therein

The employer shall send a report of accident to the nearest Branchoffice (w.e.f. 1/01/2005) - Regulation 68 & 70 – Form 12

Applicability of the Act

Any premises whereon

10 or more persons with the aid of power or

20 or more workers are/were without aid of power

working on any day preceding 12 months, wherein Manufacturingprocess is being carried on

Compliance Requirements Occupier to submit an application for registration to Chief Inspector

- Section 6 – Form 2 along with Form 3

An application for renewal of license shall be made for a period notexceeding 5 years

Notice of change in occupier shall be given within 15 days beforeoccupying or use of any factory - Section 7 – within 15 days

Copy of the declared health and safety policy signed by the occupiershall be made available to the inspector having jurisdiction over thefactory and to the Chief Inspector - Section 7A(3)

Compliance Requirements Every factory employing more than 250 workmen shall provide a

canteen to the workmen - Section 46

Manager shall appoint a canteen committee

Every factory wherein more than 150 workmen are employed shallprovide a rest room with facility for drinking water - Section 47

No adult workers shall be required to work in the factory for morethan 48 hours in any week - Section 51

Register of compensatory holidays to be maintained - Section 53


The manager of every factory shall maintain a register of adultworkers

No woman shall be required to work before 6:00 am and after7:00pm

No child who has not completed his fourteenth year shall be requiredto work in any factory

Annual Returns are to be filed by the factory in prescribed time -Section 110

Register of workers attending to machinery - Section 22



Maximum leave shall be twelve weeks of which not more than sixweeks shall be before her delivery - Section 5(3)

Leave for miscarriage - for a period not exceeding 6 weeksimmediately following her miscarriage - Section 9

To avail benefits under the act, she should have actually worked foratleast 80 days in the twelve months preceding the date of herexpected delivery - Section 5(2)


Notice may be given by the woman in writing stating that maternitybenefits be given to her or the person to whom she nominates -Section 6 r/w Rule 3

Amount of maternity benefit to be paid for the period preceding thedate of expected delivery shall be paid in advance on production ofcertificate


If a woman entitled to maternity benefit - dies before receiving thedues, employer shall pay such benefit or amount to the personnominated by the woman and in case there is no such nominee, toher legal representative - Section 7

No employer shall discharge or dismiss a woman at any time duringher pregnancy or when a she is on leave in except wit grossmisconduct - Section 12

Maternity Benefit Register - Section 20

Compliance Requirements Fixing of minimum rate of wages - Section 3

Payment of minimum rates of wages - Section 12 - as and whengovernment notifies in the official gazette

Time And Conditions of payment of wages - Rule 21

The wage period in respect of any scheduled employment - shallbe paid, on a working day

In case of an establishment in which less than thousand personsare employed, the employer shall pay wages - Before the expiryof the 7th day after the last day of the wage period

In case of an establishment in which more than one thousand personsare employed the employer shall pay wages - Before the expiry of the10th day, after the last day of the wages period

Where the employment of any person is terminated, the wages earnedby him shall be paid by the employer - before the expiry of the secondworking day after the day on which his employment is terminated

Annual return - Rule 21(4-A) - Form III - Before 1st Feb following theend of the year to which it relates

Display of rates of minimum wage in the language understandable by theworkers in the prescribed form - Rule 22 - Notice in Form-IX-A



Number of hours worked which shall constitute a normal workingday

The number of hours of work which constitute a normal working dayshall be –

an adult, 9 hours. a child, 4 ½ hours. Working day of an adult worker shall be so arranged that no

employee shall work inclusive of interval of rest, it shall notspread over more than 12 hours in a day.

Overtime work and extra wages for over time - Section 14 r/wRule25 - Form IV


Maintenance of registers and records – Form X, Form XI, Form V - Theentries in column1 to 15 must be completed before the date on whichwages are paid


Minimum wages payable shall be paid in cash

If the custom is to pay wages in kind, then wages can be paid in kind

Any contract allowing to pay wages less than minimum is null andvoid

Sri Dharam Motor Services v. Industrial Tribunal, Madras : Aworker can be asked to work for more than 6 days a week providedhe is paid extra on the overtime rate


The contributions payable by the employer shall be twelve per centof the basic wages, dearness allowance and retaining allowance (ifany) payable to each employee - Section 6 Para 29(1)

The employer shall prepare a contribution card, as may beappropriate - Form 3 or in Form 3-A

Every employer shall send to the Commissioner return in the mannerspecified and where there is no employee qualifying to becomemember, NIL return to be filed - Return in Form 5 and declarationin Form 2 -Within fifteen days of the close of each month


Every contractor shall, submit to the principal employer a statementshowing the recoveries of contributions in respect of employeesemployed - Within seven days of the close of every month

Employer shall, before paying the member his wages in respect ofany period or part of period for which contributions are payable,deduct the employee’s contribution from his wages which togetherwith his own contribution

Monthly abstract should be forwarded by the employer to theCommissioner, within twenty five days of close of the month


Employer shall prepare an employee’s pension fund contributioncard

Employer of an exempted establishment to submit a monthly returnsto commissioner – Form I - every month

Employer to send to commissioner a consolidated Return ofemployees entitled and required to become members of the scheme -within 15 days of the commencement of the scheme

Employer to send to commissioner a monthly abstract showing theaggregate amount of all members on which contributions are payable- within 25 days of close of every month


Minimum bonus to be paid as prescribed

Time limit: within 8 months from the close of accounting year


An employee to whom this Act extends to, means anyperson (other than an apprentice) employed on a salaryor wage not exceeding Rs.3,500/- p.m. in an industry

Minimum bonus payable - 8.33% of the salary or wage or Rs.100/- whichever is higher

Bonus payment has to be made within 8 months from close of accounting year


Maintenance of registers, records, etc., - From A, B, C

Every employer shall send an annual return to the Inspector - FormD

Compliances

Payment of Service Tax:

For Companies: due date 6th of the following month

For others: due date 6th of the month following end of quarter

E-payment is mandatory

Exceptions for due date: Incase of month of march till 31st March

Compliances

Returns to be filled:

Half yearly

April to September – return due date is 25th October

October to March – return due date is 25th April

General Compliances

Liability is properly calculated or not

Tax liability depends on the nature of the business

Tax exemption claimed is proper or not

Exemption notification to be followed strictly

General Compliances

Reverse charge mechanisms – Tax is payable by the recipient ofservice directly to the govt.

Examples – directors, advocates, import of services, transporter ofgoods

Compliances TDS payment is made or not within the prescribed time

Return of TDS Form 26Q & 24Q is filed or not

Any show cause notices is received or not

Advance tax status of the Company

Income tax return filed or not

TDS certificate form 16 are properly issued or not

Adequate security measures for securing the data and maintainingelectronic records are used or not

Renewal of any subscription of any software is pending or not

Licenses for certain software are obtained or not

Letter to be sent to all MSMEs

Obtain declarations from such MSMEs with whom the company isdealing

Declarations received from the MSMEs should be complete in allrespects

Payment pending to such MSMEs are to be disclosed in the AnnualReport of the Company.

Trade mark

Whether the Company is using the trade mark ?

Whether the Company is using the same class of trade mark in which it is registered ?

Incase of assignment of trade mark to sister concerns Assignment Deed is implemented or not ?

Trade mark

Two basic and the most important conditions of the deed are to be checked:

Assignment is for a specific period

Consideration is made or not.

Copyright

Is company is infringing on somebody else’s copy right ?

Working with the sales or marketing team – violating copyright provisions – copying theme - photos

Applicability

The Act, not only applies to the private and public sector but alsoincludes entrepreneur associations and Government departments(except activities relating to the sovereign functions of theGovernment and those relating to atomic energy, currency, defenceand space).

Further, the Act applies not only to activities in India, but also toactivities outside of India that affect competition within India. Hence,all businesses (large and small) are covered by the Act

Anti competitive agreement

Dealing with competitors

Bidding in a tender

Abuse Dominance

Regulation of combinations

Do we have the expertise to audit all these laws ?

NO

95% of us don’t’ have these expertise

WAY OUT

Help from experts in the respective areas

Develop our own expertise

Form LLP with the individuals who are experts of different fields

THANK YOU!!!

Documents

CS VINAYAK S. KHANVALKAR Partner KANJ & Associates, Pune ... AUDIT _PPT_VSK_final.pdf · The Air (Prevention and Control of Pollution) Act, 1981 as amended up to 1987/ Rules, 1982