Chaper 1 SPARSH Audit Manual.pdf

Chapter 1 Introduction to SPARSH Audit Manual *********** 1.1 Introduction to SPARSH: “System for Pension Administration (Raksha)” (SPARSH) is an initiative of the Minist...

Chapter 1 Introduction to SPARSH Audit Manual *********** 1.1 Introduction to SPARSH: “System for Pension Administration (Raksha)” (SPARSH) is an initiative of the Ministry of Defence which aims to provide comprehensive solution to the defence pensioners. It is a fundamental change in managing defence pensions as it focuses on bringing in efficiency, responsiveness and transparency. SPARSH is an integrated system for automating the sanction and disbursement of Defence pensions. The SPARSH initiative has been executed by the Defence Accounts Department (DAD) through the Principal Controller of Defence Accounts (Pensions), Prayagraj, which has integrated over 3,000 pension initiating, sanctioning and disbursement agencies to date and was implemented in July 2021. Under SPARSH, a complete history of events and entitlements of the pensioner from the start of the pension to the date of the cessation of pension is being given with complete transparency. All pension cycle activities, including initiation and sanction, disbursement, revision, service and grievance request management, are covered by SPARSH. The official website for the portal for the Defence Pensioner is https://sparsh.defencepension.gov.in/. 1.2 Objective of SPARSH The Key objective of SPARSH is as under: A. Centralized Sanction through Extreme Decentralised Functioning B. Disbursement Of Pension through Single Source to bring uniformity C. Easy Validation And Rectification Of Data Through Self-verification Thereby Creating “First‐time Correct Data” D. Digital Process For Pensioners’ Identification, Removing Requirement Of Multiple Visits By Pensioners To Pension Offices. E. Added Convenience With Real Time Tracking Of Grievances To Ensure Timely Resolution Of Any Disputes/ Complaints Of Pensioners F. Provides Pensioners control over their pension by easily checking their pension account and enjoy many benefits provided by the portal. 1.3 Facility for Pensioners: The System for Pension Administration RakSha (SPARSH) provides comprehensive functionality to pensioners. SPARSH’s rich feature set includes a Pensioner Portal, Pensioner Data Verification (Verify Pension Claim) and Track Pension Claim, Pre Retirement and Post Retirement tracking. a. Single point contact i.e. PCDA (P) Prayagraj for all pension and data related queries. b. The Pensioner Portal allows users manage their accounts to store and track pension information. c. Pensioner Data Verification allows users to quickly and accurately verify the correctness of their Pension Claims. This feature is essential to protect the pensioner against fraud. d. Track Pension Claim allows users to manage the payment and claim records and get updates on the status of pension claims. e. The Pre Retirement and Post Retirement tracking functionalities feature real-time information to help pensioners keep track of all their pension-related information and payment records. f. Raise request for amendment of profile (Service or Personal) duly upload necessary supporting document. No hard copy of documents is required to be sent. g. View/ download monthly pension slip and PPO h. Income tax forms including investment declaration to save the tax. 1.4 Purpose for SPARSH Audit: SPARSH is embedded with numerous automated checks and controls, designed to manage financial, operational, and security risks. These are achieved through a combination of automated rules, workflows, and validations. Operational Decision Manager (ODM), incorporates 500+ rules and over 1,000 on-screen validations, which plays a critical role in applying rule-based decision for automation across the platform from sanction to disbursement. In order to check the efficiency and correctness of the sanction and disbursement of pensionary benefits, there is a need for SPARSH Audit. Internal Audit is an independent and objective activity designed to add value and improve an organization’s operations. It provides management with an objective assessment of internal controls, processes, and accounts, ensuring that operations are conducted with integrity, efficiency, and accountability. 1.5 System based Key checks and controls for Audit In order to ensure accuracy and compliance, SPARSH system incorporates automated checks and multi-tier validations at various stages of the pension management process, the details of the same is as under; a. Order Details Audit: The details uploaded by the Order Initiator are verified by the Order Verifier for consistency with official records. The verifier has the authority to either approve the case or return it if discrepancies are found, ensuring data integrity. b. Service Details Audit: Service Verifiers review service details submitted by the Service Initiator, ensuring the pensioner's service history is recorded correctly. The verifier can approve or return the case for correction. c. Pay Details Audit: Pay details entered by the Pay Initiator are checked by the Pay Verifier to confirm alignment with entitlements. The pay verification process is crucial to avoid errors in pension calculations and disbursements. d. Medical Details Audit: The Medical Verifier reviews medical details submitted by the Medical Initiator, particularly focusing on factors that influence pension eligibility. Any discrepancies are flagged and returned for correction. e. Rank Pay Audit: It is a System Level Automated Validation. Once service and pay details are approved, the system performs an automated validation to detect inconsistencies in rank, retirement date, or group details. Any discrepancies are flagged for user correction before final approval. f. Data Tampering Audit: There is a System Level Automated Tampering Checks in SPARSH. The system checks for any tampering with service, pay, or medical data. If tampering is detected, the system alerts the Audit Initiator, who can take corrective action. g. Manual Audit: The Audit Initiator reviews all pension-related details, marking any fields requiring correction. These fields are sent to the Review Officer (RO) for rectification. The Audit Verifier ensures that corrections made by the RO are accurate and can either approve or return the case for further action. h. System Audit for Exceptional cases: Exceptional Cases for grant of War Injury Element, ex-gratia payments, LFP undergo a specialized audit workflow to ensure these sensitive cases are handled with precision. i. System Audit for Family Pension Eligibility (IFP Cases): The system automatically calculates family pension eligibility based on predefined criteria. These calculations are reviewed and approved by a Supervisor.  j. Disbursement Audit: For arrears disbursements exceeding amounting to ₹1.00 lakh, the Disbursement User performs an additional audit to ensure all high-value payments are justified and accurate. k. Re-employment Request Audit: Reemployment requests are audited to verify the accuracy of the pensioner's details. The request is validated by the Taskholder and reviewed by the Re-employment Verifier before final approval. 1.6 Need for Audit Module in SPARSH: An Integrated Audit Module in SPARSH systems in needed for integrity and accuracy of pension management processes. Defence Audit Code 2022 also mandates for establishment of standardized audit practices, ensuring that systems like SPARSH function effectively and manage risks appropriately. Although, SPARSH is equipped with inherent internal controls, yet, audit processes are labor-intensive and prone to human error, as manual intervention at various stages involved in the system. Hence regular and independent audits are essential to ensure that pension entitlements are correctly calculated and disbursed. The integration of a comprehensive Audit Module within SPARSH would provide numerous benefits: i. Automated verification of pension entitlements and payments. ii. Real-time monitoring of discrepancies or overpayments. iii. Reduced reliance on manual audits, minimizing the risk of human error. iv. Improved transparency and accuracy in financial reporting and compliance with statutory obligations. 1.7 Need for SPARSH Audit Manual: In the absence of a fully functional Audit Module, it is important to have a comprehensive guide in the form of an Audit Manual named as ‘SPARSH AUDIT MANUAL” designed to guide internal auditors through the process of conducting Computer-Aided Manual Audits of SPARSH. 1.8 Objective of SPARSH Audit: (i) To examine, using the method of data-audit/data-analysis, that entitlement of pension, family pension, Ex-gratia payments, dearness relief, other allied payments, commuted value of pension and death/retirement gratuity are correctly worked out and paid in accordance with the relevant rules and orders. (ii) To examine that amounts of payments made by the Disbursement Module of the SPARSH and recovery of overpayments/demands are correctly compiled to the relevant heads of accounts.  (iii) To ensure accountability and traceability of all actions performed within the system of SPARSH. (iv) To examine trails of data modification, user activity and system-events. (v) To ensure compliance with the Pension Act, Defense Pension Regulations, and other applicable laws and guidelines, (vi) To detect and investigate discrepancies or unauthorized activities in the system of SPARSH and verify the accuracy, completeness, and reliability of pension-related data stored in the system. (vii) To evaluate the efficiency and effectiveness of the processes and workflows within SPARSH. 1.9 Scope of Work of SPARSH Audit: The scope of audit includes all components and processes within the SPARSH system. This includes the initiation of pension claims, verification of service and financial records, issuance of PPOs, disbursement of pensions, reconciliation of accounts, and handling of grievances 1.9.1 Audit of Sanction: Sanction of pension is being done as per Operational Decision Manager inbuilt in the system. Following are the scope of work for audit of sanction a. Sanction of pensionanary benefits such as Gratuity, CVP and Pension as per entitlement. b. Notification of pensionary awards when any corrgiendum issued by revision of pension. c. Sanction of WIE or DE i. Whether WIE and DE notified separately ii. Whether rounding off of WIE and DE done as per order 1.9.2 Audit of Disbursement: Payment file is generated as per Operational Decision Manager inbuilt in the system. 1.9.2.1 Audit of First and Lumpsum Payment: a. Payment file generated as per entitlement notified in the PPO. b. Arrears Payment file generated as per modification notified in the PPO. c. Ex gratia payment file generated, as per sanction of the competent tauthority. 1.9.2.2 Audit of Monthly Pension: a. Monthly Pension generated as per rate mentioned in last PPO. b. Monthly Pension payment file Generated is equal to the number of Active pensioner minus number of NID Pensioners through generating Exception list. c. Number of Monthly pension payment file (It should be equal to the number ofprevious month payment file + Number of Pension sanction during the month + Number of pensioner identified – Number of Pensioner became NID during the month– number of pensioner became inactive during the month. d. Stoppage of pension for NID pensioner. e. Commencement of pension for the Pensioner Identified during the month. f. Increase or decrease in Pension emoluments as per corr PPO duly changing the entitlement. g. Correctness of recovery due to over payment notified in the Monthly pension and their stoppage at later stage. h. Stoppage of recovery of Commuted Pension after completion of requisite period. i. Generation of arrears payment file as and when Status of pensioner changed from NID to Identified. (Arrears of DR should not be paid to the pensioner not entitled for DR) 1.9.3 Generation of Exception List through System: a. Exception list for change of Bank accounts during payment of pension. b. Exception list for change of DR status pension. c. Exception list for pensioner became inactive due to reason other than IFP with reason for disqualification of pension. d. Exception list for Pensioner became NID but payment made. e. Exception list for pensioner became identified but payment not started. f. Exception list for change in Basic Pension. g. Exception list for stoppage of overpayment without adjustment of amount. h. List showing name of pensioner with adjustment of overpayment during the month. 1.10 Aim: The aim of Audit manual is as under; a. Facilitate a consistent and comprehensive approach: To auditing the SPARSH system, ensuring that all processes are thoroughly reviewed and evaluated. b. Ensure adherence to regulations and best practices: By following established guidelines and standards, auditors can verify that the system complies with relevant laws and policies. c. Identify and mitigate potential risks: Auditing helps to uncover potential risks such as fraud, data breaches, and operational inefficiencies, allowing for the implementation of corrective measures. d. Enhance transparency and accountability: Regular and systematic audits promote transparency in operations and hold various stakeholders accountable for their roles and responsibilities. e. Promote efficient use of public funds: By ensuring that the SPARSH system operates efficiently and effectively, audits help in the prudent management of public finances, preventing waste and mismanagement. *****