Internal Financial Controls - WIRC-ICAI

Internal Financial Controls

Who All Are Responsible?

3

What is Internal Financial Control (IFC) ?

5

What is Internal financial controls over financial reporting (ICFR) ?

6

Internal Controls ? Global Perspective

7

Expected response of stakeholders

8

Expressing an opinion on internal control ? how will you do it

10

The Companies Act 2013 ? Who All Are Responsible?

Section 134

Section 143

Section 177

Sch IV

Director's Responsibility Statement Auditor Report

Audit Committee

Independent Directors

In the case of a listed company, the Directors' Responsibility states that directors, have laid down IFC to be followed by the company and that such controls are adequate and operating effectively.

The auditor's report should also state whether the company has adequate IFC system in place and the operating effectiveness of such controls

Audit committee may call for comments of auditors about internal control systems before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company

The independent directors should satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

Page 3

The Companies Act 2013 ? Who All Are Responsible? (contd.)

Requirement (as per previous slide)

Public Listed

1 Director's Responsibility Statement (134)

IFC

2 Audit or Report (1 43 )

ICFR

3 Audit Committee (177)

ICFR

4 Independent Directors

(Schedule IV)

ICFR

5 Rule 8(5 )(viii) of t he Companies (Accounts) Rules, 2014 ? BOD

ICFR report ? Financial Statements

only (ICFR only)

Page 4

Public un-listed

Paid-up share capital>= INR 10

Cr

Turnover >= INR 100 Cr

Loans, Borrowing in aggregate >=

INR 50 Cr

Pvt Cos pd up share capital >=

INR 20 Cr

What is Internal Financial Control (IFC) ? (Sec 134)

Component s

Internal Financial

+ cont rols overs

financial report ing

Operat ional cont rols

+ = Fraud prevent ion

IFC

(ICFR)

Example

Sales realizat ion is correct ly recorded in t he Financials

Definit ion

Discount on sale is offered as per DOA and adherence t o DOA is monit ored

Unaut horised change in price master (access cont rols)

As per Sect ion 134 of t he Companies Act 2013, t he t erm `Int ernal Financial Cont rols' means t he policies and procedures adopt ed by t he company for ensuring:

orderly and efficient conduct of it s business, including adherence t o company's policies,

safeguarding of it s asset s,

prevent ion and detect ion of frauds and errors,

accuracy and completeness of t he account ing records, and

t imely preparat ion of reliable financial informat ion.

Page 5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download