A provident fund (PF) is a separate trust fund built from monthly contributions by employees and the company. Its accounts must be kept apart from the company's. We maintain each member's ledger, monthly contributions, loans, interest on FDRs and other investments, year-end interest or profit allocation and leavers' entitlements, then prepare the fund's annual accounts and audit documents.
Our team has worked on provident fund interest allocation and fund accounts for companies. The most common problems: member balances do not add up to the fund total, and FDR interest receivable at year-end is not recorded.
On this page
Why fund accounts are separate from the company
A recognised provident fund runs under a trust deed and is managed by a board of trustees. The money belongs to the employees, not the company. So the fund needs its own bank account, books, financial statements and audit. The Income Tax Act gives recognised funds certain tax benefits, which depend on meeting the conditions for recognition.
What is calculated monthly and at year-end
| Work | When | What it covers |
|---|---|---|
| Contributions | Monthly | Employee and employer shares, from payroll |
| Loans and repayments | Monthly | Member loans, instalments and balances |
| Investments | As they happen | FDRs, savings certificates or approved securities, with dates and rates |
| Interest receivable | Month or year-end | This year's share of interest even before maturity |
| Interest / profit allocation | Year-end | Credited to each member at the rate declared by the trustees |
| Leaver's entitlement | As it happens | Own share, the vested part of the employer share (per the trust deed) and interest |
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What you receive at year-end
- The fund's statement of financial position and income and expenditure account
- Annual statement for every member
- Investment schedule, interest receivable and tax deducted at source
- Bank reconciliation
- Member-wise balance list for the auditor and a summary of trustee board minutes
Frequently asked questions
What percentage do employees and the company contribute?
The rate is set by the fund's trust deed and policy. Usually employees pay a fixed percentage of basic salary and the company pays an equal amount. Recognised funds must stay within the limits in the Income Tax Act; check the current law.
Does a leaver get the company's share?
They always get their own contributions and interest. How much of the employer share they get depends on the trust deed's vesting rules, for example after a minimum number of years. We calculate it from the deed.
Is a fund audit required?
Annual audit of a recognised fund is standard practice and is written into many trust deeds. The audit report is issued by an ICAB-registered firm.
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Written by the EOMS Hisab accounts team. Last reviewed: . Bangladesh rules change with each Finance Act, SRO and circular. Check rates and thresholds against the latest official source before relying on them.