An audit finds that PF has been calculated on a lower wage than required for some employees for a year. How do you respond?

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RED SAG · Accepted Answer

First I would understand the finding exactly: which components should have been included in PF wages, which employees and which months, and get HR, legal and our PF advisers to confirm the interpretation. Then I would quantify the shortfall per employee per month for both the employee and employer shares, using payroll history. With management I would agree the remediation: usually depositing the arrears with any interest or damages that apply, and deciding whether the company bears the employee share for past months, since recovering a year of arrears from employees may be unfair. Next I would fix the system configuration, so that PF wages include the right components from the next run, and test it. I would communicate clearly to affected employees, update management and the audit committee, and keep full documentation. Finally I would add a periodic review of statutory wage definitions.

An audit finds that PF has been calculated on a lower wage than required for some employees for a year. How do you respond?

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