What is Gratuity Fund Audit in Bangladesh | Related Laws and Provisions in Bangladesh
Leading Law Firm in Dhaka, Bangladesh
“Gratuity” is a form of payment which is given an employee on the retirement or termination of his employment.
The meaning and the calculation of such amount of such payment has been addressed by the Bangladesh Labour Act, 2006. According to the 2006 Act, it means the salaries of at least thirty days, at the rate an employee last received, for each completed year of his service or for a duration of service extending six months or, in the case of service of more than ten years, the salaries of forty five days at the rate an employee received last which shall be payable to such employee on the termination of his employment by an employer. Moreover, this payment shall be in addition to any compensation, wages or allowance in lieu of a notice.
A Company pays gratuity in various circumstances. For example, a gratuity may be payable in the event of the death of an employee subject to the fulfillment of the certain criteria: an employer may pay have to gratuity if the worked for the employer continuously for more than two years and dies while in the service.
Gratuity Fund laws in Bangladesh
In the event where an employee is retrenched from service (on the ground of redundancy) by an employer and that employee has worked for the employer for not less than one year (continuously), then the employer may have to pay gratuity.
Also, in case where an employee, due to his physical or mental incapacity is discharged from service by an employer, a gratuity may have to given to him if he completes not less than one year of continuous service under that employer. Gratuity may also be given in case where the employment of a permanent employee is terminated by an employer (however, not by dismissal).
Furthermore, in the event where a permanent employee resigns from his service, an employee may be liable to pay gratuity.
Important legal Provisions Regarding Gratuity Fund in Bangladesh
However, it is crucial to note that, although there are provisions contained in the Labour Act 2006 relating to the circumstances where Gratuity is payable; however, no provision states as to whether an employer is bound by the Labour Act to pay gratuity. This is because, other than paying gratuity, the law may require an employer to choose other form of payments (which defined in the relevant sections) to provide compensation. This is because, in all the circumstances aa outlined in the previous paragraph, the Labour Act 2006 instructed to pay gratuity if it is higher than compensation.
In practice, a company pay gratuity to its employees from its gratuity fund. Therefore, auditing gratuity fund is an important factor for a company. Important of auditing lies in the fact that, it is the process of examining the financial records or statements of an organization to determine that the accuracy of financial records or statements and to make sure that those are in compliance with the accepted rules and regulation as well as meet the accepted accounting standards.
Moreover, fund audit is an important aspect for a company in respect to a number of factors. For example, it helps a business to attain its objectives, to prevent and detect frauds, increase the value and good will of the business, maintain consistency etc.
How can FMA Audit and Assurance Team
FM Associates has an expert financial legal service wing which is comprised of Certified Chartered Accountants of Bangladesh and professional experienced accountants which deals with the audit services. We have a long-standing engagement in providing audit and assurance services (which includes Fund Audit) to the clients. Over the years, by providing audit services with diligently and effectively we have earned a good reputation among the clients. Our team easily can distinguish from others in terms of skills on audit, documentation, reporting, objectivity and many more.
Our audit & assurance team provides services of internal audit, external audit in coordination with our audit partners, performance audit, fund audit etc. During audit, our team makes sure that every number in the statement is properly calculated and transparent, if so, required by the Client. Besides, our experts by analyzing the records and business practices ensure compliance with existing laws and accepted Accounting Principles around the world.
Besides, FMA’s financial wing provide a range of accounting services that includes: advice on accounting issues, preparation of financial and project financial statements, valuation of business, opinion on existing system of accounting, opinion and guideline on the adopted accounting policies by a company.