PRESENTATION ON LABOUR PAYMENT Audit of industrial payment

PRESENTATION ON LABOUR PAYMENT

Audit of industrial payment • Industrial employees get their payment as per their attendance • For all the IEs of O. Fs branch accounts office prepares paybill along with the overtime pay and other allowances. • Overtime payment made to the industrial employees for the work beyond the duty period in the forms of DOT, TOT and OTB.

Example of calculation • Suppose 54 hours overtime has been sanction for the week. • In the present case suppose one IE work for 54 hours in a week, he will entitle for 3. 15 hrs DOT, 9. 15 hrs TOT and 6 hrs OTB. • Calculation of DOT : D/200*DOT hrs(3. 15 hrs) • Calculation of TOT : P/200*TOT hrs(9. 15 hrs) • Calculation of OTB: P+2 D/200*OTB(6 hrs) – P : Basic Pay – D : DA

• Though the branch accounts office try to make the labour package full proof, Internal Audit detected some irregularities in the form of excess leave, nonregularization of absence period involving crores of overpayment and procedural irregularities. • Similarly to verify the authenticity of correct payment following audit method may be followed

methodology • Select particular two production section and particular three month attendance of an Ordnance Factory • Ask for the EARS data of the months of the sections with in and out time for all the employees from EARS section of the factory. • Ask for the OT sanction memos approved by the competent authority(available with the section/branch accounts office). • Verify the hours of attendance in the EARS data. • Verify the pay bill available in branch accounts office regarding booking of OT hours.

• Verify whethere is any difference in hours in the OT booked in the pay bill and EARS data. • Verify whether the OT booked in the pay bill is more than the OT sanction memo. • Verify whether the late hours in the EARS data has been exhibited but not shown in the pay bill. Any late attendance may be 1 minute should be deducted from the OT Bonus and OT hours only. • Also verify whether any absence period during the month has been suitably calculated in the pay bill. • In discrepancy/irregularity found during the audit should be brought to the notice of factory management as well as branch accounts office.

Irregular booking of piece work in indirect series work order • Factory management sometimes book indirect series work order in piece work. • As there is huge number of piece work cards in a month in different warrant, EDP section of the branch accounts office may be asked to find out a list of this type of work order. Datas relating the above are available in the card trans file of the labour package. • The easiest way to find the above type of booking are available in the labour extract prepared by branch accounts office.

• Consult with nature of work booked in indirect series of work order for piece work payment. • It is found in some of the factories that if the piece work booked in the indirect series work order(01 & 02 series) work order will be excluded then the section will earn minus profit and will not able to earn minimum pay. Just to avoid guarantee pay most of the time the sections books PW in indirect series work order with the approval of the General Manager. • To find out the same noting made for the same by section concerned should be consulted to highlight the irregularity. • It is also came to the notice that the booking in indirect series of work there may be some work contract etc same may be verified.

• A careful scrutiny should be made for the same and highlight the irregularities as idle payment and ask for regularization with approval of higher authority/OFB. Factory can book piece work in 01 & 02 series work order for the work in tool room for production of tools and gauges, in ODC for developmental work or any order received particularly for OFB(like printing) etc.

Overpayment due to irregular deployment of piece workers • Consequent on declaration of 6 th CPC there is a structural change in the industrial employees cadre in Ordnance factories. • Most of the skilled and highly skilled I & II craftsman became High skilled and Master craftsmen. • Most of the estimates are of 1970, 80 or 1990 are based in cadre structure (semi skilled and skilled) at that point of time, but ordnance factories are deploying as per the present structure as skilled and semi skilled are not available.

• On implementation of the new cadre structure, there should be a downward revision of estimate as the present structure consist of highly skilled labour and master craftmen. • However in none of the ordnance factories the estimate has not been revised so far, resulting heavy overpayment in OT, OTB and PW Profit.

methodology • In earlier days there is a provision in the estimate regarding no of skilled, semi skilled, high skilled should be in a gang or there is provision in the estimate that no of semi skilled, skilled or high skilled labour take how long to complete the job. If the same practice is still in use in any ordnance factory, then labour estimate should be verified with the deployment of high skilled and MC in the place of provision of semi skilled and skilled labour. • If above practice is not in use, in that case to highlight the over payment audit should select certain sections of an ordnance factory and verify the ratio of semi skilled, skilled and high skilled labour in the year 2007 & 2008. • Taking into account the present availability of high skilled and master craftsmen in the section.

• Audit should highlight the gang consisting during 3 years back and the gang consisting presently for a similar product. • Financial repercussion could be assessed by taking the minimum pb+gp of both the categories to exhibit the overpayment. • After highlighting the above matter should be taken up with factory management for reconciliation and downward revision of the estimate. Ø In this connection please refer the letter from CFA/BGF to the branch accounts office in this regard which is self explanatory.

THANK YOU • Prepared by IA/MSF