ICAI to help EPFO with accrual accounting system

Institute of Chartered Accountants of India will take up a pilot project for EPFO

ICAI, the apex body of chartered accountants, will help Employees' Provident Fund Organisation (EPFO) to migrate to accrual accounting system.

In this regard, the Institute of Chartered Accountants of India (ICAI) would take up a pilot project for EPFO.

A Memorandum of Understanding has been inked between ICAI Accounting Research Foundation (ICAI ARF) and EPFO.

"The project with EPFO represents the first phase wherein the ICAI ARF will study EPFO's existing accounting system with an intent to design the strategy for a smooth migration and transition to accrual system of accounting," ICAI said in a statement today.

Accrual accounting, in general, refers to a system where the financial position of an entity is evaluated irrespective of cash payment or receipt.

ICAI President K Raghu said the accrual accounting system would further allow EPFO to structure a financial management and reporting framework aligned to the international standards.

The ICAI ARF would submit a report on the migration strategy at EPFO with respect to the accounting system.

Globally, government organisations are moving towards adoption of accrual accounting.

"The proposed system is also expected to provide for improved levels of financial management and performance evaluation to support EPFO's objective to continue to strive to provide best services for the overall benefit of its subscribers," Raghu noted.