PFRDA circular PFRDA/2023/17/Sup-PoP/03 · 29 May 2023
Official title
Audit of Points of Presence (PoPs) performing activities of National Pension System
Summary
Check the official recordPoints of Presence (PoPs) registered under PFRDA regulations must conduct an annual audit of their NPS-related accounts and processes. This audit must be performed by an independent external chartered accountant or audit firm meeting specific eligibility criteria. The audit scope encompasses internal controls, regulatory compliance, KYC/AML/CFT adherence, and data security. PoPs are required to submit the audit report to PFRDA within three months of the financial year's closure. For the financial year 2022-23, the deadline is three months from the circular's issuance date. The Authority will review these reports and may initiate action if requirements are not met. PoPs must also ensure their auditors adhere to a three-year tenure and a two-year cooling-off period.
What you must do
Key dates
Who is affected
Thresholds
If you do not comply
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
Circular No. PFRDA/2023/17/Sup-PoP/03
29 May 2023
To Point of Presence (PoPs) performing activities of NPS
Subject: Audit of Points of Presence (PoPs) performing activities of National Pension System
PoPs registered under Regulation 3(1)(i), 3(1)(ii) and 3(1)(iii) of Pension Fund Regulatory and Development Authority (Points of Presence) Regulations, 2018 and amendment thereof and performing activities of NPS (PoPs-NPS) shall ensure that the annual accounts and processes maintained under NPS are audited on annual basis by an independent external chartered accountant/audit firm as per the provisions of Operational Guidelines issued vide Circular dated 17th September 2017 or modified Operational Guidelines issued under PFRDA (PoP) Regulations, 2018 and amendment thereof, from time to time. The eligibility norms for appointment of auditor is prescribed at Annexure 1.
The scope of such audit shall cover, inter-alia, the existence, scope, adequacy and efficacy of internal control system, procedures and safeguards, compliance with the provisions of the Pension Fund Regulatory and Development Authority Act, 2013, Pension Fund Regulatory and Development Authority (Points of Presence) Regulations, 2018 and amendment thereof and Guidelines/ Circulars/Notifications issued by the Authority, KYC requirements as per PML Act/Rules and data security in respect of the operations of such Point of Presence. The Broad Scope of Audit is listed at Annexure 2.
PoPs must maintain the books of accounts and records including electronic records and documents as stipulated in the Regulations/Guidelines/Circulars/Notifications issued by the Authority from time to time.
The Audit Report format along with Instructions is placed at Annexure 3. PoPs shall submit the audit report to PFRDA within 3 months from the date of closure of the accounts and the first such audit report shall be for the period April 1, 2022 to March 31, 2023. Further, for the FY 2022-23, PoPs shall submit the audit report to PFRDA within 3 months from the date of issuance of this Circular.
The audit reports shall be reviewed by the Authority and appropriate course of action would be pursued in cases where reports are not as per the requirements.
PoPs are advised to ensure compliance with the above.
General Manager
Annexure 1
ELIGIBILITY NORMS FOR SELECTION OF AUDITOR
PoPs shall appoint the external auditor as per the list of auditors empaneled by any of the Financial Sector Regulator (FSRs) including PFRDA to conduct the audit for activities related to NPS. Further, the central/ state government department/ entities shall conduct the audit through the internal audit department or through the external auditor as per the list of auditors empaneled by any of the FSRs including PFRDA.
PoPs shall appoint the Auditor as per the eligibility criteria prescribed by the PFRDA, with the approval of the Audit Committee or the Board, wherever the Audit Committee is not present.
PoPs who are non-listed Government entities may engage the internal audit department or appoint Auditor as per the eligibility criteria prescribed by the PFRDA with the approval of Competent Authority.
Auditors shall be appointed for a tenure of three years.
Auditors will have a cooling period of two years in respect of the same PoP. After completion of tenure of three years, audit entity should not accept any audit assignment of that PoP during the next two years.
Annexure 2
SCOPE OF WORK OF AUDIT NATIONAL PENSION SYSTEM (NPS)
Auditor appointed by the PoP shall conduct the audit of the PoP for activities related to NPS and the audit firm would broadly have the scope of work related to the following categories of PoPs under National Pension System (NPS):
(i) Distribution and servicing for public at large through physical as well as online platforms (hereinafter referred as PoP-NPS) (ii) Distribution and servicing for citizens at large through online platforms only (hereinafter referred as PoP-NPS-online) (iii) Distribution and servicing only for own employees and other (online personnel either through physical or online platforms (hereinafter referred as PoP-NPS-Corporate)
The Broad Scope of Work of Auditor is as under:
i. Subscriber registration/On Boarding of subscribers under NPS. ii. Compliance of KYC/AML/CFT guidelines dated 23rd February 2023 (as amended) issued by the Authority. iii. Collection and processing of initial contribution and subsequent contribution received from the subscribers. iv. Uploading of Subscriber Contribution File (SCF) in CRA System and Transfer of Fund to Trustee Bank. v. Maintenance of collection account by the PoP in accordance with provisions of PFRDA (PoP) Regulations 2018 and guidelines issued there under. vi. Reconciliation of subscriber’s contribution received by the PoP in the collection account and maintainace of audit trail for the same. vii. Subscriber grievance handling by the PoPs as prescribed under Subscriber Grievance Regulations, 2015 and circulars issued there under. viii. Receiving and processing service requests such as change in subscriber details, address, PFM and Pension Fund Change, Intersector shifting etc. received from the subscribers in CRA system. ix. Receiving and processing of subscriber withdrawal/exit request with in timelines laid down in CRA system. x. Adherence to the timeframe laid down under the guidelines issued by the Authority. xi. Payment of compensation by PoP for delayed activities as prescribed under Operational Guidelines. xii. Verification of supporting documents, in case of delays, due to technical reasons/beyond the control of PoP and wherever PoP has not paid the compensation, xiii. Charges collected by the PoPs and to check the limits, mode and manner of collection as laid down by PFRDA. Also, to validate that charges quoted by the PoPs in any tender floated by the corporates are in accordance with the limit prescribed by the PFRDA. xiv. Maintenance of Books of Accounts by the PoPs. xv. Verification of compliance report submitted by PoPs to PFRDA. xvi. Compliance with the circulars/ guidelines/ notifications issued by PFRDA and/ or any other Statutes xvii. Appointment and discharge of responsibilities of Compliance Officer and Principal Officer xviii. Any other activity in relation to the above.
Note: The scope as specified above is only indicative and not exhaustive
Annexure 3
AUDIT REPORT (To be furnished on the letter head of the Audit Firm)
CERTIFICATE FOR AUDIT
We have examined the relevant books of accounts, records and documents maintained by M/s____________________________________________, (name of the Point of Presence (PoP)) bearing Pension Fund Regulatory and Development Authority (PFRDA) Registration Number _____________________under NPS and to fulfill the audit requirement, as prescribed by Pension Fund Regulatory and Development Authority (Points of Presence) Regulations, 2018 and Guidelines issued there under, for the financial year _____________.
The purpose of this audit is to examine that the processes, procedures followed and the operations carried out by the Point of Presence (including the operations by its facilitators/Banking Correspondents/any other service provider approved by the Authority) are as per the applicable Acts, Rules, Regulations, By-laws prescribed by the Authority and Guidelines, Circulars, Notifications etc. issued thereunder.
We have obtained all the information and explanations, and examined the relevant books which to the best of our knowledge and belief, were necessary for the purpose of this Audit. In our opinion, proper books of accounts, records and documents, as per the regulatory requirement have/have not been maintained by the PoP. (Strike whichever not applicable)
