Accounting Norms700393322 PDF

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PFRDA) PFRDA (PREPARATION OF FINANCIAL STATEMENTS AND AUDITORS REPORT OF SCHEMES
UNDER NATIONAL PENSION SYSTEM) GUIDELINES -2012
PFRDA (Preparation of Financial Statements and Auditors Report of schemes under National Pension System) Guidelines -2012
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PFRDA) PFRDA (PREPARATION OF FINANCIAL STATEMENTS AND AUDITORS REPORT OF SCHEMES UNDER NATIONAL PENSION SYSTEM) GUIDELINES -2012
1. Short title, application and commencement These guidelines may be referred to as PFRDA (Preparation of Financial Statements and Auditors Report of schemes under National Pension System) Guidelines -2012. These guidelines deal with the preparation and reporting of the financial statements for the NPS Schemes regulated by the Authority. In respect of the preparation and audit of the Financial Statements of PF the provisions of Companies Act, 1956 shall be applicable and audit fee for such audit shall be borne by the PF. The Authority may issue separate directions/ guidelines in the matter of appointment, continuance or removal of auditors of the PF and such directions/ guidelines may include prescriptions regarding qualifications and experience of auditors, their rotation, period of appointment etc. as may be deemed necessary by the Authority.
2. Definitions.(I) In these guidelines, unless the context otherwise requires (a) Authority means the Pension Fund Regulatory and Development Authority (PFRDA); (b) Custodian means Stock Holding Corporation of India Ltd.(SHCIL) appointed as custodian under tripartite agreement between Trust, Authority and the PF; (c) Financial Year for the schemes means period ending 31st March of each year; (d) Financial Statements of the scheme means balance sheet, revenue account and notes, schedules and other integral reports. (e) Pension Fund or PF or PFM means the Pension Fund Manager appointed and/or registered for the management of the NPS schemes regulated by the Authority;
(f) Scheme(s) or scheme(s) or NPS means any scheme under National Pension System ; (g) Subscriber means a person who subscribes to a scheme of a Pension Fund; (h) Trustee or Trust or NPS Trust means National Pension System (NPS) Trust. (II) All words and expressions used herein shall have the same meaning as assigned to them in the Company act, 1956 except to the extent the same is defined in these guidelines and are not inconsistent as there to. Annual report and Auditors report 3. A PF shall prepare in respect of each financial year an Annual Report comprising Balance Sheet and Revenue Account of each scheme and obtain auditors report thereon from the auditors after the commencement of these Guidelines and in compliance with the requirements of Schedule A, or as near thereto as the circumstances permit, so as to provide appropriate details of the scheme-wise disposition of the assets at the relevant accounting date and the performance during that period together with information regarding distribution and accumulation of income accruing to the subscribers in a true and fair manner, as per the guidelines issued by the Authority from time to time. 4. The financial statements of the schemes should be approved at a meeting of the Board of Directors of the PF and forwarded the same to NPS Trust for approval at a meeting of the Board of Trustee of NPS Trust. 5. Every Balance Sheet and Revenue Account of Schemes shall be in conformity with the Accounting Standards (AS) notified under Companies Act, 1956, to the extent applicable to PF Schemes and not inconsistent with these guidelines. Appointment of Auditor: 6. Every PF shall have the financial statements of scheme audited by an external auditor who is not in any way associated with the audit of the PF or sponsor of the concerned PF or any other PF or schemes of any other PF. Scheme auditor will be appointed by the NPS Trust and audit fee will be paid by the Trust and recovered from PF. 7. The Authority may, from time to time, issue separate directions/ guidelines in the
matter of appointment, continuance or removal of auditors of scheme, as the case may be, and such directions/ guidelines may include prescriptions regarding qualifications and experience of auditors, their rotation, period of appointment etc. as may be deemed necessary by the Authority. To maintain proper books of account and records etc.: 8. Every PF for each scheme shall keep and maintain proper books of accounts, records and documents, for each scheme so as to explain its transactions and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the scheme and intimate to the Trustee the place where such books of account, records and documents are maintained, if not maintained at registered office of the PF. PF is solely responsible for the correctness of books of accounts, records and documents. Annual report to be forwarded to the NPS Trust: 9. Every PF shall within sixty days from the date of closure of each financial year forward to the NPS Trust a copy of the Audited Annual Report and other information including details of investments and deposits held by the PF so that the entire scheme-wise portfolio of the PF is disclosed to the NPS Trust. 10. NPS Trust will approve the scheme Financial Statements of the schemes of the PF after recommendation by the Board of PF as per clause 4. Publication of Annual report: 11. The Annual Report and portfolio details of each scheme shall be prominently uploaded on the website of the respective PFs by the PF soon after approval by the Trust. 12. The scheme wise Annual Report or an abridged summary thereof shall be mailed/e-mailed to all subscribers by the PF through CRA. The report mailed in abridged summary to all subscribers shall carry a note that full Annual Report shall be available at the website of PF and the link of the same, where the full report is uploaded, will be mentioned. 13. Annual Report shall be available for inspection at the Head Office of the PF and a copy thereof shall be made available to the subscriber on payment of such nominal fee as may be specified by the Authority. Half-yearly disclosures
14. PF shall before the expiry of one month from the close of each half year that is on 31st March and on 30th September, disclose its scheme wise unaudited financial statements along with statement of scheme portfolio on their web site. Provided that the half-yearly unaudited report referred here shall contain details as specified in Schedule A, or as near thereto as the circumstances permit, and such other details as are necessary for the purpose of providing a true and fair view of the operations of scheme. Calculation of NAV: 15. Pension Fund shall compute the Net Assets Value of each scheme by dividing the net assets (to be derived by subtracting Authority allowed charges from the value of assets) of the scheme by the number of units outstanding on the valuation date of each scheme. The initial price of each unit for every scheme shall be Rupees Ten. 16. The Net Asset Value of the scheme shall be calculated and published at intervals as specified by the Authority /NPS Trust. The Net Asset Value of units for each Scheme shall be declared on a daily basis. 17. Authority may from time to time modify these guidelines. Schedule A (See Clause 3)
I. Annual Report Each PF shall prepare a consolidated Annual Report comprising financial statements of all the schemes managed by them. The annual report shall contain (i) Report on the operations of each scheme during the financial year and future outlook of the each scheme; (ii) Accounting Policies, valuation policies, Balance Sheet and Revenue Account in accordance with paragraphs II, III, IV and V of this Schedule; (iii) Auditors Report in accordance with paragraph VI of this Schedule; (iv) Brief statement on the following aspects, namely : (a) Liabilities and responsibilities of the PF; (b) Investment objective of each scheme; (c) Basis and policy of investments underlying the scheme;
(d) If the scheme permits investments partly or wholly in shares, bonds, debentures and other scripts or securities whose value can fluctuate, a statement on the following lines: The price and redemption value of the units, and income from them, can go up as well as down with the fluctuations in the market value of its underlying investments; (e) Comments on the performance of the scheme, with full justification with possible comparison with other benchmark yields, if any, as prescribed by the Authority. (v) Statement giving relevant perspective historical per unit statistics in accordance with paragraph VII of this Schedule; II. Accounting Policies The Accounting Policies related to investments to be followed by PF for preparation of financial statements shall be as follows: 1. The PF should maintain their scheme-wise books of account on an accrual basis. Investment should be stated at marked to market at the Balance Sheet date/date of determination/date of valuation. 2. Investments should be tallied with the custodian records and units should be tallied with CRA records on daily basis. 3. In respect of all allowable expenses and incomes accrued upto the valuation date, which are considered for computation of asset value/ NAV. Major expenses like management fees and other allowable periodic expenses like custodian charges etc should be accrued on a day-to-day basis, however such allowable expenses and income items need not be so accrued, provided the non-accrual does not affect the asset value calculations by more than 1%.The period to be considered for accrual will be the financial year. 4. Dividend income earned by a scheme should be recognised, not on the date the dividend is declared, but on the date the share is quoted on an exdividend basis. For investments which are not quoted on the stock exchange, dividend income must be recognised on the date of declaration. 5. In respect of all interest-bearing investments, income must be accrued on a day to day basis. Therefore, when such investments are purchased, interest paid for the period from the last interest due date upto the date of purchase must not be treated as a cost of purchase but must be debited to Interest Recoverable Account. Similarly interest received at the time of sale for the
period from the last interest due date upto the date of sale must not be treated as an addition to sale value but must be credited to Interest Recoverable Account. 6. In determining the holding cost of investments and the gains or loss on sale of investments, the weighted average cost method must be followed. 7. Transactions for purchase or sale of investments should be recognised as of the trade date and not as of the settlement date, so that the effect of all investments traded during a financial year are recorded and reflected in the financial statements for that year. Where investment transactions take place outside the stock market, for example, acquisitions through private placement or purchases or sales through private treaty, the transaction should be recorded in the event of a purchase, as of the date on which the scheme obtains in enforceable obligation to pay the price or, in the event of a sale, when the scheme obtains an enforceable right to collect the proceeds of sale or an enforceable obligation to deliver the instruments sold. 8. Bonus shares to which the scheme becomes entitled should be recognised only when the original shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus basis. Similarly, rights entitlements should be recognized only when the original shares on which the right entitlement accrues are traded on the stock exchange on an exrights basis. Until they are traded, the value of the right share should be calculated as: Vr = n/m * (Pef - Pof) Where Vr n m Pex Pof = Value of rights = No. of rights offered = No. of originals shares held = Ex rights price = Rights Offer Price
Where the rights are not treated pari passu with the exiting shares, suitable adjustment should be made to the value of rights. Where it is decided not to subscribe for the rights but to renounce them and renunciations are being traded, the rights can be valued at the renunciation value. 9. Where income receivable on investments has accrued but has not been received for a period of 90 days beyond the due date, provision shall be
made by debiting to the revenue account for the income so accrued and no further accrual of income should be made in respect of such investments. 10. The cost of investments acquired or purchased will include applicable taxes and stamp charges but exclude brokerage and other transactional charges. In respect of privately placed debt instruments any front-end discount offered should be reduced from the cost of the investment. Total transaction expenses, upto such ceilings as contractually agreed to or approved by Authority, from time to time, will be charged to the NAV of the scheme(s). Auditor(s) of the Pension Fund will certify after verification that all transaction expenses in excess of the limits contractually agreed to/approved by Authority are borne by the Pension Fund and are not charged to the NAV. 11. All taxes which are leviable and actually paid shall be charged to the NAV of the Fund and be borne by the Subscriber. Any subsequent refund on this account, if any, should be added to the scheme/fund as income. 12. The Investment Management Fee is inclusive of all transaction related charges such as brokerage, transaction cost etc. except custodian charges and applicable taxes. The Investment Management Fee is calculated on the average monthly assets managed by the pension fund. The fees to be charged by Authority and/or NPS Trustee shall be calculated per annum and will not be charged to the scheme. 13. An investment is regarded as non-performing, if interest/principal or both amount has not been received or has remained outstanding for 90 days from the day such income/instalment has fallen due. Provision shall be made by charge to the Revenue Account, in respect of: a) Non Performing Debt Securities as per the Authority Guidelines to be issued from time to time. b) Securities where the certificates, if any, are not traceable for a protracted period. c) Assets other than investments, which in the opinion of the Board Of Directors of PF have suffered substantial impairment in their value. 14. Income on non-performing assets (NPA) shall be recognised on receipt and other incomes of miscellaneous nature shall be accounted for when there is certainty of collection. III. Valuation Policies
1. Securities traded at a stock exchange: (i) The securities shall be valued at the daily close price on the stock exchange.
(ii) When the securities are traded on more than one recognised stock exchange, the securities shall be valued at the daily close price on the stock exchange where the security is principally traded. It would be left to the custodi custodian to select the appropriate stock exchange, but the reasons for the selection should be recorded in writing. (iii) Once a stock exchange has been selected for valuation of a particular security, reasons for change of the exchange, if any subsequently, shall be recorded in writing by the custodian. (iv) When on a particular valuation day, a security has not been traded on the selected stock exchange, the value at which it is traded on another stock exchange may be used. (v) Debt securities (other than government securities) are valued at the last quoted closing price on the principal exchange on which the security is traded. Collateralized borrowing and lending obligations (CBLO) and rediscounted bills are valued at cost plus accrued interest. Money market instruments like treasury bills, commercial paper and certificate of deposit should be typically valued at amortised cost. If however, they are traded, then they should be valued at the last traded price on NSE. Government securities will be valued at yield to maturity based on the prevailing market rates. The PF may also use CRISILs valuation methodology as used by the mutual fund industry to value the debt instruments in their portfolios. (vi) Investments in mutual fund schemes are valued based on the net asset value of the respective schemes of the preceding day of the valuation date. (vii) When a security is not traded on any stock exchange on a particular valuation day, the value at which it was traded on any other stock exchange as the case may be, on the earliest previous day is used, provided that such day is not more than thirty days prior to the valuation date for equity shares and fifteen days for debt securities. When a debt security (other than a Government Security) is purchased by way of private placement, the value at which it was
bought may be used for a period of fifteen days beginning from the date of purchase. 2. Securities not traded at a stock exchange : Non-traded Securities: When a security (other than Government Securities) is not traded on any stock exchange for a period of thirty days (instead of the existing provision of 60 days) prior to the valuation date, the scrip must be treated as a non-traded security. Thinly Traded equity related Securities: When trading in an equity related security (such as convertible debentures, equity warrants etc.) in a month is less than Rs. 5 lakhs or the total volume is less than 50,000 shares, it shall be considered as a thinly traded security. Thinly Traded Debt Securities: A debt security (other than a Government Security) that has a trading volume of less than Rs. 5 crores in the previous calendar month shall be considered as a thinly traded security based upon the information provided by the relevant stock exchange on the volume of debt securities traded. (i) Nontraded / thinly traded / privately placed equity securities including those not traded within thirty days and nontraded / thinly traded / privately placed debt securities including those not traded within fifteen days shall be valued in-good faith on the basis of appropriate valuation methods based on the principles approved by the Authority/Trust. For the purpose of valuation of non-traded securities, the following principles should be adopted : (a) Equity instruments shall generally be valued on the basis of capitalization of earnings solely or in combination with the net asset value, using for the purposes of capitalization, the price or earning ratios of comparable traded securities and with an appropriate discount for lower liquidity. (b) In respect of convertible debentures and bonds, the non-convertible and convertible components shall be valued separately. The nonconvertible component should be valued on the same basis as would be applicable to a debt instrument. The convertible component should be valued on the same basis as would be applicable to an equity instrument. If, after conversion the resultant equity instrument would be traded pari passu with an existing instrument which is traded, the
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value of the latter instrument can be adopted after an appropriate discount of the non-tradability of the instrument during the period preceding the conversion while valuing such instruments, the fact whether the conversion is optional should also be factored in; (c) Where instruments have been bought on repo basis, the instrument must be valued at the resale price after deduction of applicable interest upto date of resale. Where an instrument has been sold on a repo basis, adjustment must be made for the difference between the repurchase price (after deduction of applicable interest upto date of repurchase) and the value of the instrument. (ii) Any changes in securities be recorded in the books not later than the first valuation date following the date of transaction. If this is not possible given the frequency of the Asset Value disclosure, the recording may be delayed upto a period of seven days following the date of the transaction, provided that as a result of the non-recording, the Asset Value calculations shall not be affected by more than 1%. In case the Net Asset Value of a scheme differs by more than 1%, due to non-recording of the transactions, the investors or scheme/s as the case may be, shall be paid the difference in amount as follows:-
(iii)
(i) If the investors are allotted units at a price higher than Net Assets Value at the time of purchase or are given a price lower than Net Asset Value at the time of sale of their units, they shall be paid the difference in amount by the scheme. (ii) If the investors are charged lower Net Asset Value at the time of purchase of their units or are given higher Net Assets Value at the time of sale of their units, asset management company shall pay the difference in amount to the scheme. The asset management company may recover the difference from the investor. 3. Thinly Traded Securities which can be
Valuation of Thinly Traded Securities shall be done "in good faith" governed by the valuation principles laid down below: (i) Thinly traded equities:
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(a) Based on the latest available Balance Sheet, net worth shall be calculated as follows: Net Worth per share = [share capital + reserves (excluding revaluation reserves) Misc. expenditure and Debit Balance in P&L A/c] Divided by No. of Paid up Shares. (b) Average capitalisation rate (P/E ratio) for the industry based upon either BSE or NSE data (which should be followed consistently and changes, if any noted with proper justification thereof) shall be taken and discounted by 75% i.e. only 25% of the Industry average P/E shall be taken as capitalisation rate (P/E ratio). Earnings per share of the latest audited annual accounts will be considered for this purpose. (c) The value as per the net worth value per share and the capital earning value calculated as above shall be averaged and further discounted by 10% for illiquidity so as to arrive at the fair value per share. (d) In case the EPS is negative, EPS value for that year shall be taken as zero for arriving at capitalized earning. (e) In case where the latest balance sheet of the company is not available within nine months from the close of the year, unless the accounting year is changed, the shares of such companies shall be valued at zero. (f) In case an individual security accounts for more than 5% of the total assets of the scheme, an independent valuer shall be appointed for the valuation of the said security. To determine if a security accounts for more than 5% of the total assets of the scheme, it would be valued by the procedure above and the proportion which it bears to the total net assets of the scheme to which it belongs would be compared on the date of valuation. (ii) Debt securities: (a) Non-traded /Thinly Traded Debt Securities with residual maturity of up to 60 Days: Non-traded /Thinly traded Debt Non-Government Securities, including floating rate securities, with residual maturity of upto 60 days shall be valued at the weighted average price at which they are traded on the particular valuation day. When such securities are not traded on a particular valuation day they shall be valued on amortization basis. It is further clarified that in case of floating rate securities with floor and caps on coupon rate and
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residual maturity of upto 60 days then those shall be valued on amortization basis taking the coupon rate as floor. (b) Non-traded/ Thinly Traded Debt Securities with residual maturity of over 60 days. Non-traded / Thinly traded Non-Government Debt Securities, including floating rate securities, with residual maturity of over 60 days shall be valued at weighted average price at which they are traded on the particular valuation day. When such securities are not traded on a particular valuation day they shall be valued at benchmark yield/matrix of spread over risk free benchmark yield obtained from agency (ies) entrusted for the said purpose by AMFI. The approach in valuation of non-traded debt securities is based on the concept of using spreads over the benchmark rate to arrive at the yields for pricing the non-traded security. The yields for pricing the non-traded debt security would be arrived at using the process as defined below. Step 1: A Risk Free Benchmark Yield is built using the government securities as the base. Government securities are used as the benchmarks as they are traded regularly; free of credit risk; and traded across different maturity spectrum every week. Step 2: A Matrix of spreads (based on the credit risk) are built for making up the benchmark yields. The matrix is built based on traded corporate paper on the wholesale debt segment of an appropriate stock exchange and the primary market issuances. The matrix is restricted only to investment grade corporate paper. IV. Contents of Balance Sheet: i) The Balance Sheet shall give scheme wise particulars of its assets and liabilities. It shall also disclose, inter alia, accounting policies relating to valuation of investments and other important areas. ii) The balance-sheet shall disclose under each type of investment(s) the aggregate carrying value and market value of non-performing investments. An investment is regarded as non-performing, if interest/principal or both amount has not been received or has remained outstanding for 90 days from the day such income/instalment has fallen due.
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iii) The Balance Sheet shall disclose the per-unit net asset value (NAV) as at the end of the accounting year. iv) The Balance Sheet shall give against each item, the corresponding figures as at the end of the preceding financial year. v) The notes to the Balance Sheet shall disclose the following information regarding investments: (a) All investments shall be grouped under the major classification given in the balance sheet; (b) Under each major classification, the total value of investments falling under each major industry group (which constitutes not less than 5% of the total investment in the major classification) shall be disclosed together with the percentage thereof in relation to the total investment within the classification; (c) A statement of investments showing the name of the companies in which investments have been made including the amount of investment in each company by each scheme and the aggregate investments made by all schemes in the Associates and Group Companies of the PF, if any. A full list of investments of the scheme shall be made available for inspection by the PF to the appropriate authority ; (d) If brokerage, custodial fees or any other charges for services are paid to or payable to any entity in which the PF or its major shareholders have a substantial interest (being not less than 10% of the equity capital), the amounts debited to the Revenue Account or amounts treated as cost of investments in respect of such services shall be separately disclosed together with details of the interest of the PF or its major shareholders; (e) The basis on which fees have been paid to PF and the computation thereof; (f) Aggregate value of purchases and sales of investments during the year and expressed as a percentage of average daily net asset value; (g) Where the non-traded investments which have been valued in good faith exceed 5% of the NAV at the end of the year, the aggregate value of such investments;
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(h) Movement in unit capital shall be stated; (i) The total income of the scheme shall include unrealised depreciation or appreciation on investments. vi) Provisions for doubtful deposits, doubtful debts and for doubtful outstandings and accrued income shall not be included under provisions on the liability side of the balance sheet, but shall be shown as a deduction from the aggregate value of its relevant asset. vii) Disclosure shall be made of all contingent liabilities showing separately uncalled liability on partly paid shares and other commitments with specifying details. Contents of scheme wise Balance Sheet ASSETS SIDE OF THE BALANCE SHEET: I. The assets of the balance sheet shall be grouped into the following categories : - Investments (Long term and short term) - Deposits - Other Current Assets II. INVESTMENTS (Long term and short term): The following types of investments shall be separately disclosed (only those heads under which investments is permitted to be kept): (i) Equity shares; (ii) Preference shares; (iii) Debentures and Bonds listed/awaiting listing on a recognized stock exchange; (iv) Central and State Government Securities (including treasury bills); (v) Commercial Paper; (vi) Others- Mutual Funds etc. III. DEPOSITS Distinguishing between : - Deposits with scheduled banks; - Others. IV. OTHER CURRENT ASSETS
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Distinguishing between: - Balances with banks in current/savings account; - Cash on hand; - Sundry Debtors; - Contracts for sale of investments; - Outstanding and accrued income; - Advance, Deposits etc.; - Shares/debentures/ others application money pending allotment (for this age wise disclosure is to be made along with security name); - Others. LIABILITIES SIDE OF THE BALANCE SHEET I. Liabilities side of the balance sheet shall be divided into the following groups (i) Unit Capital; (ii) Reserves & Surplus; (iii) Current Liabilities and Provisions. II. Unit Capital: Distinguishing between: - Initial capital; - Unit capital (including number of units and face value per unit). III. Reserves & surplus Distinguishing between: - Unit Premium Reserve (Optional) - General reserve; - Any other reserve (disclosing its nature); - Appropriation account; -Opening balance, transfer from/to reserve, closing balance shall be separately disclosed for each above type of reserve. IV. Borrowings V. Current liabilities and provisions Distinguishing between the following current liabilities and provisions Current liabilities: - Sundry creditors; - Contract for purchase of investments; - Unclaimed distributed income; Provisions (Indicate nature): VI. Contingent liabilities - Disclosure should be made of all contingent liabilities, showing separately:
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(i) Uncalled liability on partly paid shares; (ii) Other commitments; and (iii) Others (specifying details). V. Contents of Revenue Account: i) ii) The Revenue Account shall give scheme wise particulars of the income, expenditure and surplus of the PF. If profit on sale of investments shown in the Revenue Account includes profit/loss on inter-scheme transfer of investments within the same PF the aggregate of such profit recognised as realised, shall be disclosed separately without being clubbed with the profit/loss on sale of investments to third parties. The Revenue Account shall indicate the appropriation of surplus by way of transfer to reserves. The following disclosures shall also be made in the Revenue Account: (a) provision for aggregate value of doubtful deposits, debts and outstanding and accrued income; (b) profit or loss on sale and redemption of investments may be shown on a net basis; (c) custodian, trustee Bank and CRA charges (d) Total income and expenditure expressed as a percentage of average net assets, calculated on a daily basis. Contents of Revenue Account Income: - Dividend; - Interest; - Profit on sale/redemption of investments (other than inter-scheme transfer/sale); - Profit on inter-scheme transfer/sale of investments; - Unrealized gain on appreciation in investments - Other income (indicating nature). Expenses and losses: - Unrealized losses in value of investments - Provision for outstanding accrued income considered doubtful; - Provision for doubtful deposits and current assets;
iii) iv)
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- Loss on sale/redemption of investments (other than inter-scheme transfer/sale); - Loss on inter-scheme transfer/sale of investments; - Management fees; - Trusteeship/regulatory fees; - Publicity expenses; - Audit fees; - Custodian fees; - Trustee Bank fees - CRA fees Less : Amount recovered on sale of units on account of CRA charges Note : (i) Accounting policy in respect of recognition of revenue and income from investments (including dividend and interest) shall be disclosed by way of a note. (ii) The total income and expenditure expressed as a percentage of average net assets, calculated on a daily basis should be indicated. VI. Auditors Report (i) All PF shall be required to get accounts of their schemes audited in terms of Clause 3 of these Guidelines. The Auditors Report shall form a part of the Annual Report. It shall accompany the Balance Sheet and Revenue Account. The auditor shall report to the NPS Trust. (ii) The auditor shall state whether : 1. he has obtained all information and explanations which, to the best of his knowledge and belief, were necessary for the purpose of his audit, 2. the Balance Sheet and the Revenue Account are in agreement with the books of account of the fund. 3. whether proper books of accounts of each scheme have been maintained. 4. all transaction expenses in excess of the limits contractually agreed to/approved by Authority are borne by the Pension Fund and are not charged to the NAV. (iii) The auditor shall give his opinion as to whether: 1. the Balance Sheet gives a true and fair view of the scheme wise state of affairs of the fund as at the end of the financial year, 2. the Revenue Account gives a true and fair view of the scheme wise surplus/deficit of the fund for the financial year.
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(iv)
The Auditor shall further certify that: 1. Investments have been valued in accordance with the guidelines issued by the Authority; 2. The system, procedures and safeguards followed by the PF are adequate; 3. The provisions of appointment letter by Authority, IMA agreement signed with the Trust are being complied with by the PF; 4. Directions issued by the Authority/ NPS Trust from time to time or any other statutory requirements have been followed; 5. Affairs of the PF are being conducted in a manner which is in the interest of the subscribers; 6. Transaction and claims/ fee raised by different entities are in accordance with the prescribed fee.
VII. Perspective historical per unit statistics 1. This statement shall disclose the following scheme-wise per unit statistics for the past 3 years: (a) net assets value, per unit; (b) gross income per-unit broken up into the following components: i) income other than profit on sale of investments, per unit; ii) income from profit on inter-scheme sales/transfer of investments per unit; iii) income from profit on sale of investments to third party, per unit; iv) transfer to revenue account from past years reserve, per unit. (c) aggregate of expenses, write-offs, amortisation and charges, per unit; (d) net income, per unit; (e) unrealised appreciation/depreciation in value of investments, per unit; (f) if the units are traded or repurchased/resold, the highest and the lowest prices per unit during the year and the price-earning ratio ; (g) per unit, ratio of expenses to average net assets by percentage; (h) per unit, ratio of gross income to average net assets by percentage (excluding transfer to Revenue Account from past years reserves but including unrealized appreciation on investments) ; (i) Per unit NAV
As and when relevant data available. Till then immediate preceding years figures may be given.
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PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PFRDA) PFRDA (PREPARATION OF FINANCIAL STATEMENTS AND AUDITORS REPORT OF SCHEMES

UNDER NATIONAL PENSION SYSTEM) GUIDELINES -2012

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