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HR Due Diligence Audit

Keeping on mind with rapid growth in the competitive markets, and that too in this vital and verticalized department, one needs an expertised outsourcing in way of trusted hands, to cater all the compliance needs and health check, so as to focus on organization’s performance excellence and quality management. In short, one needs to experience a 360* total peace of mind in establishing organization’s unit(s) 100% compliance on labour laws and related acts, with fulfilled support. That’s why Pragnaa Shree Venture India Pvt Ltd provides the following due diligence audit to our clients so that they can know the present status of compliances, well in advance.

  • Establishment Compliances Audit
  • Factory Compliances Services
  • Contract Labour Compliances Audit
  • Payroll Audit

Since the ultimate responsibility is vested in the Principal Employer, Pragnaa provides a comprehensive audit report enlisting its observations and recommendations. The report also covers the “RISK FACTORS” in various parameters. An essential component of the Audit/s is verification of the mandatory statutory Registers /Records, Returns Submission and Remittance under the various statutory Acts, applicable to the Establishment / Factory.

Scope of Audit

Team Pragnaa shall conduct in depth due diligence audit of Labour Compliances applicable to the Establishment / Factory on basis of documents submitting by the Principal Employer for the specific Audit period and visiting the factory plant if require.

Audit Methodology
  • The detailed due diligence audit checklist of Establishment / Factory Compliances, covered all relevant labour laws applicable to the target unit shall be prepared.
  • The date of audit shall be informed in advance with the list of required audit documents / details to the target unit.
  • To be thoroughly verified relevant records and documents are available during the audit.
  • Audit report shall be compiled based upon findings and observations of the audit team.
  • Before finalize the due diligence audit report, Pragnaa would suggest for a review meeting with the unit head on the findings of audit.
  • The final detailed Non-compliance (NC) report with criticality of compliances shall be shared.
Labour Laws covered under the Scope of Audit
  • The Factories Act, 1948.
  • Shops & Establishments Act, 1947.
  • The Minimum Wages Act, 1948.
  • The Payment of Wages Act, 1936.
  • The Payment of Gratuity Act, 1972.
  • The Payment of Bonus Act, 1965.
  • The Maternity Benefit Act, 1961.
  • The Employees' Provident Fund and Miscellaneous Provisions Act, 1952.
  • The Employees' State Insurance Act, 1948.
  • The Contract Labour (Regulation & Abolition ) Act, 1970.
  • The Interstate Migrant Workmen Act, 1979.
  • The Equal Remuneration Act, 1976.
  • The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959.
  • The Industrial Establishments (National & Festival Holidays) Act, 1958..
  • The Labour Welfare Fund Act, 1972.
  • The Apprentices Act 1961 and the Apprenticeship Rules 1991
  • The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
  • Child Labour (Prohibition & Regulation) Act, 1986
  • Tax on Profession Act (Local Panchayat)
Payroll Audit

The in-depth Payroll Audit would be covering the following criteria…

  • Verification of additions to the payroll (new employees hired during the month), new hiring should be approved as per company policies / The pay scale or basis salaries shall be verified that these are according to approval or company policy.
  • To check that the employees left the job during the period have been properly removed from the payroll so that their salaries could not be processed as they are no longer employees of the company. Increments, Promotions / demotions during the month - Calculate the increase or decrease in the pay scale (salaries) of the employees, check the approval for the change in pay scale of the employees during the month.
  • Loans to employees - Verifying the additions (the employees who have been paid the loan during the month) with the approval or according to the company policies / Verifying the deletions (employee whose loans have been removed from the payroll, verify their settlements etc. / Check that loan deductions are according to standard deduction or according to loan repayment schedule etc.
  • Advances to employees - To verify that all advances have been deducted from the salaries of the employees who were paid the advances during the month.
  • Fuel / Conveyance Allowances - Calculate the additions during the month in the payroll for Fuel or conveyance allowance and verify the approvals.
  • Prepare analytical review report for overall payroll, e.g. comparison between the last month and current month's payroll figures in depth etc. / An analytical review shall be performed over the increments processed and also it will be reconciled by adding the changes to the opening pay scale (total payroll).
  • Incentives paid to employees - There might be any other content in the payroll depending the company's payroll structure e.g. Incentive paid to employee etc.