Understanding
Internal Auditing is an independent, objective assurance and consulting activity wherein business processes are reviewed in terms of compliance/control perspective.
The objective of Internal Audit shall also include identification of process design-related concerns including documenting recommendations considering Industry analysis
Applicability (as per Sec 138 of Companies Act, 2013)
- Where in Paid-up share capital > 50 Cr applicable for public unlisted companies and not applicable for private companies,
- Where in Outstanding deposits > 25 Cr applicable for public unlisted companies and not applicable for private companies,
- Where in turnover > 200 Cr applicable for public unlisted companies and private companies,
- Where in Outstanding loan & borrowings from bank > 100 Cr applicable for public unlisted companies and private companies,
- Internal Audit is mandatory for all listed companies
Approach
- Planning includes scoping of the process, a study of company financials, applicable laws & regulations, industry & company news, company policies and procedures, a result of previous audits, etc. and accordingly arrive at key areas/sub-areas wherein considerable focus shall be required (in discussion with the Management)
- Kick-off meeting with the relevant stakeholders
- Fieldwork includes walkthrough (System, physical, documentation), understanding process & controls from key personnel, data analytics and identification of sample, reviewing relevant documents & vouchers and verification related activities (where ever applicable)
- Reporting should also include clear root causes and recommendations for actions post discussion at stakeholders and management officials
- Follow-up –Following up is critical to ensure that the recommendations have been implemented to address the findings identified.
Benefits
- Add value (Process & Monetary terms) and improve an organization’s operations
- Effectiveness and efficiency of operations
- Reliability of financial reporting
- Compliance with laws and regulation
- Evaluate and improve the effectiveness of risk management, control, and governance processes
Contact Us Today to know more about our Internal Audit services.
Last Updated: 17th September 2019
This article is contributed by:
Vikram Prabhakar
Associate Director, RITS
