Top Law Firm in Bangladesh

Top Law Firm in Bangladesh

Leading Law Firm in Bangladesh

Leading Law Firm in Dhaka

Provident Fund Laws and Audit in Bangladesh

Leading Law Firm in Dhaka, Bangladesh

Provident Fund Laws Bangladesh

In order to understand provident fund Laws and audit procedures in Bangladesh let us first consider describing what is “Provident Fund. Provident fund is a fund through which a company provide employees with payments when they leave their place of employment. To put it in other way, all the employment lawyers in Bangladesh works around the definition that provident fund is a type of fund where the employees of a company contributes a certain percentage of their basic salary every month in order to have a retirement benefits at the time of exit from their employment.

With the experienced gained through several years of providing employment legal services in Bangladesh, we have prepared this guide which shall provide an understand in regard to provident fund laws in Bangladesh and then stipulate the procedure of the provident fund audit in Bangladesh in brief.

Provident Fund Laws in Bangladesh

As per the provident fund laws in Bangladesh, which can be understood upon reading the  Labour Act 2006 in conjunction with the Labour Rules 2015, it is noteworthy that besides what the employees contribute to the provident fund in Bangladesh, employers are also required to contribute a matching amount to the fund. However, provident fund must not be confused with the pension fund.

Employees of private companies are highly benefited by the provident fund in the absence of any scheme for pension fund. It works as a security for their future life. In Bangladesh, the provident fund laws in Bangladesh and its guidelines of setting is governed by the Labour Act 2006. Section 264 of the Labour Act 2006 states about the establishment of provident fund in private sector. 

As per the provident fund laws in Bangladesh, a Board of Trustee must be formed by a company which shall administer the provident fund. The law requires that, a Board of Trustee must be comprised of equal number of representatives of the employer and employees (section 264(5) of the Labour Act)

Provident Fund Audit Procedure in Bangladesh

Step 1, Legal Compliance

In order to contribute to the provident fund and get benefited, an employee’s job must have to be permanent in his company. This is because, an employee of a temporary nature does not fall within this scheme. According to section 264 (9) of the Labour Act 2006, every permanent employee, after completion of one year of his service in the established, shall contribute to the fund every month to a sum which shall not be less than seven percent and not more than eight percent of his monthly basic salary. The law also requires the employers to pay an equal amount. Although, the companies may make their own rules for maintaining such a fund, however, that must not be disadvantageous to the employees than the legal guidelines that are provided. 

Moreover, under the Labour Act 2006, there are provisions requiring to establish provident fund for the Tea plantation workers as well as for the Newspapers workers.

Step 2, Follow Provident Funds Act

In Bangladesh, a provident fund created under Labour Act 2006 is deemed to be a government established for the purposes of the Provident Funds Act, 1925 (Act No. XIX of 1925) (as per section 17 of the Labour Act 2006).

Step 3, Yearly Auditing of Provident Fund in Bangladesh

There is a requirement to audit the provident fund every year. The audit of provident fund is beneficial for both employers and employees. According to section 14 of the Labour Act 2006, the accounts of income and expenditure of the provident fund must be audited every year. 

Step 4, Keeping up to Date Yearly Financial Audit of the Company

A financial 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. An audit on the provident fund inspects several important issues thoroughly, among them, the contributions made on the on funds and the requirements, the income produced by the fund, any payment or reimbursement from the fund etc.

Step 5, keeping tax documents up-to-date

If the provident fund constituted by a company is recognized by the NBR (National Board of Revenue), in that case, both the employee and the employer shall get an income tax exemption on fund amount.

How we provide the best Provident Fund Audit and Legal Services in Bangladesh

FM Associates has an expert financial legal service wing which is comprised of Certified Chartered Accountants of Bangladesh and experienced team 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 internal control process and also Accounting Standards around the world.