Finance and Accounts of the Organisations

In one line

Chapter X is the accounting law for the five Social Security Organisations: who audits them, who approves their budgets, who sees their annual report, and how often somebody checks that the funds can meet their promises.

In exam wording: sections 115 to 121 of the Code on Social Security 2020 require each Social Security Organisation to maintain proper accounts, to be audited annually by the Comptroller and Auditor-General of India, to frame a budget for the approval of the appropriate Government, to submit an annual report which is laid before the legislature, to have its assets and liabilities valued at stated intervals, and they confer powers to hold property and write off losses.

Why the law has this at all

Because these bodies hold other people's money for thirty years before paying it back, and two very different failures are possible.

Theft or waste is met by the ordinary machinery of accounts, audit and a report laid before the legislature: sections 115, 116 and 118.

Insolvency is the subtler danger and is met by section 119. A pension fund can be perfectly honest, perfectly audited, and still unable to pay what it has promised, because the promises fall due decades after the contributions come in. Only an actuarial valuation discovers that, and only in advance.

So the design has two halves worth naming separately in an answer: accountability, sections 115 to 118 and 121, and solvency, section 119.

Some words this chapter uses

Comptroller and Auditor-General of India is the constitutional auditor of public accounts, whose independence comes from Article 148 of the Constitution. Actuary is a professional who calculates the present value of future liabilities using probabilities of death, disability and retirement. Valuer does the equivalent for assets. Working balance is cash kept in hand to meet obligations as they fall due. Write off means removing an unrecoverable amount from the books; it does not extinguish the underlying claim unless the law says so.

Section 115: accounts

Each of the Social Security Organisations shall maintain proper accounts of its income and expenditure, in such form and manner as the appropriate Government may specify after consultation with the Comptroller and Auditor-General of India.

Notice the consultation. The Government prescribes the form, but not without asking the auditor who will have to audit it.

Section 116: audit

Section 116(1). The accounts of each Organisation shall be audited annually by the Comptroller and Auditor-General of India, and any expenditure he incurs on that audit is payable by the Organisation to him.

Section 116(2), the auditor's powers. The Comptroller and Auditor-General, and any person he appoints, have the same rights, privileges and authority in connection with that audit as he has in connection with the audit of Government accounts, and in particular the right to: