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Internal Financial Control (IFC): Assessment & Compliance Implementation
IFC
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Background
• What is Internal Financial Control (IFC) ?
• Who All Are Responsible?
• Internal Controls – Expected responsibility of stakeholders
• IFC – Beyond Compliance
• Indiba Consultancy’s Offering for IFC – Assessment and Compliance
• IFC – Tools and Accelerators by Indiba Consulting
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Fraud prevention
OperationalControls
Internal Financial controls Over financial reporting
(ICFR)
IFC
Purchase liability (AP) iscorrectly recorded in the Financials
Payments to suppliers is done as per agreed credit Policy.
Unauthorized change in Item price master (access controls)
Example
As per Sect ion 134 of t he Companies Act 2013 , t he term ‘Internal Financial Controls’ means the policies and procedures adopted by the company for ensuring:
Orderly and efficient conduct of its business, including adherence to company’s policies,
Safeguarding of its assets, Prevention and detection of
frauds and errors, Accuracy and completeness of
the accounting records, and Timely preparation of reliable
financial information.
Definition
What is Internal Financial Control (IFC) ?
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Who All Are Responsible? As per Companies Act 2013
Who All are Responsible
Public Listed
Company
Public Unlisted Companies Pvt. Co. Paid up Share
Capital >= INR 20 Cr
Paid-up share
capital >= INR 10 Cr
Turnover >=
INR 100 Cr
Loan /Borrowing
in aggregate >= INR 50
Cr
1 Director’s Responsibility, Statement (134 ) IFC
2 Auditor (143 ) ICFR
3 Audit Committee (177 ) ICFR
4 Independent Directors (Schedule IV) ICFR
5 Rule 8(5)(viii) of the Companies, (Accounts) Rules, 2014 – BOD report – Financial Statements
ICFR
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Expected responsibility of the stakeholders
Would like to see a robust framework that is aligned to accept able standards
Review & question the basis of your controls design and ongoing assessments
Focus on internal controls,to the extent these relate to the financial reporting (ICFR)
Auditors Responsibility limited to Evaluation of Financial Reporting Controls”
Company Management
Auditors
Audit Committee/ Independent Director
Create & t est theframework of internal
controls
• IFC (including operational & Compliance)
• Controls documentation
Would rely on the assessment and view of the Audit Committee
They may ask for additional information
Board of Directors
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How will IFC help beyond compliance ?
• Helps in business process re-designing to plug revenue leakages & cost containment opportunities
• Helps in rationalizing the number of controls across organization – moving to smart and automated controls
• Helps in standardizing policies and procedures for multi-location/ multi-business Companies
• Fosters a control conscious work culture for people behind controls
• Provides assurance to the CEO/ CFO as well as improves business performance
• In some instances, also serves as a base for blue print of optimal procedures while thinking about ERP
Aimed at strengthening the processes to further improve business, identify cost containment opportunities as well as drive growth
Indiba Consulting Offering for: IFC Assessment & Control Implementation
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Understand, Educate & Communica
te
Plan & Scope
Document, Assess &
RemediateSustain & Monitor
Understanding Compliance requirement
Project Planning Project Management & Quality Assurance
Project Team & Training
Control Assessment Ongoing Training & Communication
Communication Plan
development
Internal Control Risk
Assessment Monitoring &
ReportingInternal Control
Framework Development
Phase 1 Phase 2 Phase 3 Phase 4
Project
People
Process
Internal financial controls (IFC) - implementation methodology
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IFC - Tools and Accelerators (by Indiba Consulting)
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Some of our Customers
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Thank You
Contact us :www.indba.inMumbai Office :Office No – 57, Ground Floor, Foundation Towers, CBD Belapur, Sector 11Mumbai – 400614.
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Cell : +91 9028013279/9987454045Telephone : +91 22 65206530Email : [email protected]