The Companies Act, 2013 has introduced a new requirement for listed companies. Accordingly, the Board of Directors (Sec 134), Audit Committee (Sec 177) and Independent Directors (Sch. IV) is responsible for laying down Internal Financial Controls (IFC) to confirm on the adequacy and operating effectiveness of the framework for IFC.
Furthermore, under Sec 143 of the Companies Act, external auditors are required to separately issue an opinion on the adequacy of IFC and the operating effectiveness of such controls. Considering this, all unlisted companies (public and private) have to gear up to meet the requirements of IFC. The only relief provided by the ICAI guidance note is that the scope of the external audit will be restricted to financial reporting controls only.
The revised guidance note issued by the ICAI recently has also extended the requirement of opinion from external auditors to consolidated financial statements, thereby emphasizing the focus required on completing the management design and testing across all companies within a group.
Considering the limited timeframe available to ensure adherence to the requirements and also meet conditions of external auditors, companies need to immediately embark on this initiative.
Introduction to IFC and its components
The requirement of IFC under Companies Act, 2013
IFC Project Scope
Understanding documentation with live examples and hands-on experience
SOX/IFC Global Scenario
Regulatory requirements with the perspective of similar global requirements
Key Difference between IFC & Enterprise Risk Management
Specific approach for
financial reporting controls (benchmarked to ICAI guidance note)
operational controls (with reference to globally recognized control frameworks)
resilience controls (with reference to globally recognized control frameworks)
Integrated reporting to:
Assessment of Entity-Level Controls
Integration with internal audit
Materiality and scoping
Meeting stakeholders requirements
Overview of ICAI guidelines
Assessing the design of controls with practical examples and hands-on practice sessions
Value addition approach
Key Process and Controls Assessment
Assessing operating effectiveness along with practice sessions