Sections 115 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 115 requires every Social Security Organisation to keep proper accounts of income and expenditure. Section 116 says the Comptroller and Auditor-General of India audits those accounts every year and sets out the audit powers and the route the audited accounts follow.
Each Social Security Organisation keeps proper accounts of income and expenditure in the form and manner the appropriate Government specifies after consulting the CAG (s.115). The CAG audits the accounts annually, at the organisation's cost, with powers to demand books, vouchers and papers and to inspect offices (s.116(1), (2)). The certified accounts and audit report go to the organisation, which adds its comments and forwards them to the appropriate Government (s.116(3)).
Why it matters
These sections do not bind an ordinary employer, but they govern the bodies that hold employer and employee money: the Central Board, the Corporation and the other Social Security Organisations. They tell you who checks the funds your contributions go into. If you want to understand how your establishment's dues fit the wider compliance framework, our legal consultation team can walk you through it. The organisations are introduced in sections 4 and 5 and in section 2. Budgets and annual reports follow in sections 117 and 118.
Section 115: accounts
Each Social Security Organisation shall maintain proper accounts of its income and expenditure in such form and manner as the appropriate Government may, after consultation with the Comptroller and Auditor-General of India, specify. The Code does not prescribe the form itself; it is left to the Government's specification.
Section 116: audit
| Sub-section | Content |
|---|---|
| (1) | Accounts of each organisation are audited annually by the CAG; the organisation pays the CAG's audit expenditure |
| (2) | The CAG and any person he appoints have the same rights, privileges and authority as in auditing Government accounts, including the right to demand books, accounts, vouchers, documents and papers and to inspect any office of the organisation |
| (3) | The accounts as certified by the CAG (or his appointee) with the audit report go to the organisation, which forwards them, with its comments on the report, to the appropriate Government |
Central Rule 52 for the Corporation
For the Employees' State Insurance Corporation, rule 52 of the Code on Social Security (Central) Rules, 2026 adds detail (Central Government as appropriate Government). Among other things:
- accounts are balanced on 31 March each year, and revenue accounts and a balance sheet are prepared by 31 May, extendable by the Central Government by up to thirty days on application;
- annual accounts go to the CAG for scrutiny on or before 15 June, also extendable by up to thirty days;
- the CAG may require documents by written notice and require persons to appear, make declarations and answer questions;
- the audited accounts and annual report are placed for adoption at a meeting of the Corporation before 10 December, with the CAG report expected by 20 November; and
- the auditors may report material impropriety or irregularity or loss from neglect or misconduct, and the Standing Committee must remedy defects and report action within ninety days.
Rule 52 also provides for disallowance and surcharge of improper items after an opportunity to explain, with an application to the Central Government within one month of service of the certificate. Other organisations follow the forms and procedures specified for them by the appropriate Government.
How the two sections fit together
Section 115 is about the books; section 116 is about the check on them. The first leaves the format to the appropriate Government, which must consult the CAG before specifying it. That consultation matters because the CAG will later audit against the same format. The second gives the audit its teeth: an annual cycle, full access to books and vouchers, and a duty on the organisation to forward the certified accounts and the audit report, with its own comments, to the Government.
A few practical points follow from the text:
- Every Social Security Organisation is covered, not only the Corporation. The definition in section 2 identifies the bodies, such as the Central Board, the Corporation and the National Social Security Board and the State boards.
- The organisation bears the cost of the CAG's audit, so audit expense forms part of its administrative spending.
- The organisation's comments on the audit report travel with it. The Code does not give the organisation a right to withhold the report or alter it.
- The "appropriate Government" is the Central Government for the Central Board and the Corporation, and the State Government for State bodies. Read the definition before deciding which Government's specification applies.
- The Code does not prescribe consequences here for a late audit; it leaves the timelines to the Government's specification and, for the Corporation, to rule 52.
The main value of the provisions for the wider compliance picture is that funds built from contributions are subject to an external audit by the country's supreme audit institution, which then reports to the legislature under section 118.
A worked example
The Corporation closes its books on 31 March, prepares revenue accounts and a balance sheet by 31 May, and submits them to the CAG by 15 June. The CAG's team demands vouchers for a particular expenditure and inspects a regional office, as s.116(2) allows. The audited accounts and report return to the Corporation, which records its comments and forwards the set to the Central Government; the Government then places the documents before Parliament, as s.118(2) requires. (Illustrative.)
Need help with the legal framework?
If you want to understand how the Code's institutions, funds and oversight connect to your compliance duties, our legal consultation team can help you place each provision in context and plan the next step.
Key takeaways
- Every Social Security Organisation keeps proper accounts of income and expenditure.
- The form and manner come from the appropriate Government after consulting the CAG.
- The CAG audits annually; the organisation pays the audit cost.
- The CAG has full rights to demand documents and inspect offices.
- Audited accounts go to the appropriate Government with the organisation's comments.
- For the Corporation, rule 52 sets 31 May, 15 June, 20 November and 10 December milestones.
Read next
- Sections 117 and 118: Budget and annual report
- Sections 119 to 121: Valuation, investment and writing off
- Sections 4 and 5: Central Board and Employees' State Insurance Corporation
- ESI under new labour codes: Social Security Code 2020
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.