Section 46: Preparation and Maintenance of Accounts

Overview

Section 46 of the Code on Social Security, 2020, doesn’t relate to a specific benefit like Provident Fund or ESI directly. Instead, it establishes the foundational requirement for *all* social security organizations operating under the Code to maintain accurate and transparent financial records. This applies to organizations administering benefits related to Provident Fund, Employees’ State Insurance (ESI), Gratuity, Maternity Benefit, and other schemes covered by the Code. It ensures proper financial governance across the entire social security landscape.

Who is Covered?

• This section applies to every ‘social security organisation’ established or functioning under the provisions of the Code on Social Security, 2020. This includes bodies administering various social security schemes.
• There are no direct eligibility conditions related to employees or establishments within Section 46 itself. The eligibility for specific benefits (like ESI or Provident Fund) is determined by the relevant chapters and sections of the Code dealing with those schemes.

Benefits and Contributions

Section 46 doesn’t directly deal with employee benefits or contribution amounts. It focuses on the *financial management* of the funds collected through contributions and used to provide those benefits. The benefits and contribution structures are defined within the specific chapters relating to each social security scheme (e.g., Chapter V for Provident Fund, Chapter VI for ESI).

Procedure and Compliance

Here’s a breakdown of the compliance requirements under Section 46:

1. Annual Accounts Preparation: Every social security organisation must prepare annual accounts.
2. Required Statements: These accounts must include a balance sheet, an income and expenditure statement, and reports detailing how funds were utilized.
3. Prescribed Formats: The accounts must adhere to formats prescribed by the appropriate authority (likely through rules framed under the Code).
4. Accounting Standards: Accounts must be prepared in accordance with generally accepted accounting standards.
5. Digital Maintenance: The Code mandates the use of modern digital platforms for maintaining these accounts to ensure accuracy and efficiency.
6. Proper Recording: All monetary transactions and expenditures related to schemes must be meticulously recorded.

Practical Examples

• Example 1: The Employees’ Provident Fund Organisation (EPFO) is required to prepare annual accounts detailing all contributions received, interest credited, withdrawals made, and administrative expenses incurred. These accounts are subject to audit and public scrutiny.
• Example 2: If a social security organisation fails to maintain accurate accounts or uses funds for purposes not permitted under the Code, it could face penalties, including fines and potential legal action. For instance, if an ESI fund is used to fund unrelated administrative costs, it would be a violation of Section 46 and related provisions.

Disclaimer

This article is for basic understanding of social security law and should not be treated as legal advice. For specific legal guidance, please consult with a qualified legal professional.