The Hindu Business Line : EPFO to switch to double entry accounting system

THE long-standing confusion over the Employees Provident Fund Organisation's (EPFO) financial situation may finally be over with the Government deciding to switch to the double-entry accounting system instead of the currently practiced single entry system.

The Government has decided to switch the EPFO's accounting practices as part of the Reinventing EPF India Project and it is likely to be completed in two years, officials said.

At the last meeting of the Central Board of Trustees (CBT), it was decided that a committee would be formed with an official from the Labour Ministry and two representatives from the trade unions and the employers to look into the irregularities pointed out by the Comptroller and Auditor General of India (CAG) report , Mr Hasubhai Dave, President of the Bharatiya Mazdoor Sangh, said.

Under the double-entry system, a specific and clear picture of the assets and liabilities of the organisation is available. Not so under single-entry, as a result of which the overall asset and liability position is not clear.

The AITUC General Secretary, Mr Gurudas Dasgupta, too pointed out that the real asset-liability position will be clear only when the actual financial transactions are known.

"Until the double-entry system is in place, it will not reveal the actual financial transactions and resources. And if this is not revealed, how will we know what is the financial position of the organisation," Mr Dasgupta said.

For example, the EPFO had been paying 12.5 per cent interest when the Special Deposit Scheme was paying 15-16 per cent interest. According to trade union leaders, EPFO officials were not sure how much was collected from the 3-4 per cent excess that had accumulated over the years.

Also, the suspense account grows each year though no one knows the exact amount it holds. The double-entry system will bring clarity on these issues, Mr Dave said.

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