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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.

UAE :2204,Fortune Executive Towers T-1,JLT,Dubai United Arab Emirates

Cell : +91 9028013279/9987454045Telephone : +91 22 65206530Email : info@indiba.in