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Section 116: Accounts and audit of social security organisations

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter X: Finance and Accounts
Competent Labour Forum
Act No. 36 of 2020
Section 115 All 163 Sections of Code on Social Security, 2020 Section 117

Legal Commentary & Landmark Judgments: Section 116

Section 116 of the Code on Social Security, 2020 establishes comprehensive statutory accounting, record-keeping, and audit mandates for all Social Security Organisations, ensuring complete financial transparency and fiduciary integrity in the administration of national worker funds.

  • Statutory Maintenance of Proper Accounts: Imposes a non-delegable duty upon every Social Security Organisation to maintain proper accounts and other relevant records, and prepare an annual statement of accounts, including a balance sheet, in such form and manner as prescribed by the Central Government in consultation with the Comptroller and Auditor General of India.
  • Appointment and Powers of Statutory Auditors: Provides that the accounts of each organisation shall be audited annually by such auditors as the Central Government may appoint, or by the Comptroller and Auditor General of India, investing auditors with complete powers of inspection, access to books, and summoning of officers.
  • Audit Observations and Rectification Mandate: Requires the organisation to examine every audit observation, compile compliance explanations, and execute necessary rectifications in their financial books within the statutory timeline prescribed by the appropriate Government.
  • Transmission of Audited Accounts to Government: Mandates that the audited accounts, together with the audit report thereon, shall be forwarded annually to the Central Government and relevant State Governments for legislative transmission.
Key Landmark Precedents:
  • Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1: The Supreme Court affirmed that independent auditing of statutory authorities handling public and welfare revenues is an essential constitutional requirement to prevent fraud and financial mismanagement.
  • State of U.P. v. Babu Ram Upadhya AIR 1961 SC 751: Established that statutory accounting rules framed under legislative enactments possess statutory force and must be strictly adhered to by public bodies.
  • Association of Unified Telecommunications Service Providers of India v. Union of India (2014) 6 SCC 572: The Supreme Court confirmed that statutory audit powers extend to examining all underlying books, revenue records, and transactional trails to ensure complete accounting fidelity.
Courtroom Practice & Strategic Litigation Guidance:

Finance departments of social security bodies must adopt double-entry accrual accounting and deploy enterprise financial ERPs that generate immutable, timestamped audit trails. Establish a dedicated Internal Audit Directorate to conduct pre-audits of large procurement contracts, pension disbursements, and IT expenditures. Maintain an active Audit Rectification Register to clear external auditor observations prior to submitting the annual balance sheet under Section 116.

Section 115 All 163 Sections of Code on Social Security, 2020 Section 117