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Spirit of Governance
Spirit of Governance
Hemant Joshi
Hemant Joshi
MM. Com., FCA, ICWA, CISA, CIA, ISA, CCSA, CFE
. Com., FCA, ICWA, CISA, CIA, ISA, CCSA, CFE
Transparency and Disclosures for
Better Corporate Governance
September 09, 2007
Venue: Symbiosis Institute of Management Studies
2
August 25, 2007: Hyderabad Blasts
August 25, 2007: Hyderabad Blasts
3
Sep
tem
ber
11,
200
1S
epte
mb
er 1
1, 2
001
•
4
Imp
act
Imp
act
��19
ter
rori
sts
hija
cked
4 a
ircr
aft
for
suic
ide
atta
cks
19 t
erro
rist
s h
ijack
ed 4
air
craf
t fo
r su
icid
e at
tack
s
��A
lmo
st 3
000
peo
ple
kill
edA
lmo
st 3
000
peo
ple
kill
ed
��In
Man
hat
tan
: In
Man
hat
tan
: --
34.5
mill
ion
ft
34.5
mill
ion
ft2 2
off
ice
spac
e lo
sto
ffic
e sp
ace
lost
--$5
0$5
0-- 7
0 b
illio
n i
n in
sure
d lo
sses
70 b
illio
n i
n in
sure
d lo
sses
Most of these direct economic losses were
Most of these direct economic losses were
incurred by the private sector
incurred by the private sector
5
Corporate Scandals –Non Stop
Action
6
Agenda:
��C
orp
ora
te G
ove
rnan
ce: C
on
cep
tC
orp
ora
te G
ove
rnan
ce: C
on
cep
t
��E
nh
anci
ng
Shar
eho
lder
sE
nh
anci
ng
Shar
eho
lder
s ’’V
alu
eV
alu
e
��G
lob
al P
ract
ices
G
lob
al P
ract
ices
��B
oar
d a
nd
Man
agem
ent
Stru
ctu
reB
oar
d a
nd
Man
agem
ent
Stru
ctu
re
��R
isk
Man
agem
ent
Ris
k M
anag
emen
t
7
Corporate Governance:
Corporate Governance:
Concept
Concept
8
7 Things which Shareholders Want?
7 Things which Shareholders Want?
1.S
har
eho
lder
s se
ek a
mea
nin
gfu
l say
in w
ho
sit
s o
n t
he
bo
ard
2.S
har
eho
lder
s la
ck t
rust
in a
bo
ard
th
at la
cks
ind
epen
den
t le
ader
ship
3.S
har
eho
lder
s ex
pec
t d
iscl
osu
re t
o r
evea
l th
e co
mp
any’
s tr
ue
con
dit
ion
bey
on
d
4.S
har
eho
lder
s ar
e sk
epti
cal o
f co
mp
lex
com
pen
sati
on
sc
hem
es
5.S
har
eho
lder
s w
ant
exit
sce
nar
ios
to b
e re
aso
nab
le
6.S
har
eho
lder
s ex
pec
t th
e b
oar
d t
o t
ake
resp
on
sib
ility
--
and
ch
ange
th
e b
oar
d -
-w
hen
nec
essa
ry
7.S
har
eho
lder
s sh
ou
ld b
e ab
le t
o e
ffec
t ch
ange
Source: Paper by Weil, Gotshal & Manges LLP, New York
9
McKinseyStudies: October 1999 and April 2000
Source:http://www.mckinsey.com
Kn
ow
ing
that
th
e re
lati
on
ship
bet
wee
n c
orp
ora
te g
ove
rnan
ce
Kn
ow
ing
that
th
e re
lati
on
ship
bet
wee
n c
orp
ora
te g
ove
rnan
ce
and
a c
om
pan
yan
d a
co
mp
any ’’
s p
rofi
ts is
co
mp
lex,
McK
inse
y co
nd
uct
ed t
hre
e s
pro
fits
is c
om
ple
x, M
cKin
sey
con
du
cted
th
ree
stu
die
s b
etw
een
st
ud
ies
bet
wee
n October 1999 and April 2000
October 1999 and April 2000
to d
isco
ver
ho
w
to d
isco
ver
ho
w
shar
eho
lder
s b
oth
per
ceiv
e an
d v
alu
e co
rpo
rate
go
vern
ance
in
shar
eho
lder
s b
oth
per
ceiv
e an
d v
alu
e co
rpo
rate
go
vern
ance
in
Asi
a, E
uro
pe
and
th
e U
S, a
nd
Lat
in A
mer
ica
Asi
a, E
uro
pe
and
th
e U
S, a
nd
Lat
in A
mer
ica
Important Observations:
Important Observations:
��B
oar
d p
ract
ices
are
at
leas
t as
imp
ort
ant
as f
inan
cial
B
oar
d p
ract
ices
are
at
leas
t as
imp
ort
ant
as f
inan
cial
p
erfo
rman
cep
erfo
rman
ce
��80
per
cen
t o
f th
ose
su
rvey
ed s
aid
th
ey w
ou
ld p
ay m
ore
fo
r 80
per
cen
t o
f th
ose
su
rvey
ed s
aid
th
ey w
ou
ld p
ay m
ore
fo
r sh
ares
of
a w
ell
shar
es o
f a
wel
l --go
vern
ed c
om
pan
y th
an a
po
orl
y go
vern
ed o
ne.
go
vern
ed c
om
pan
y th
an a
po
orl
y go
vern
ed o
ne.
��F
ailu
re t
o r
efo
rm g
ove
rnan
ce w
ill r
esu
lt in
co
mp
etit
ive
Fai
lure
to
ref
orm
go
vern
ance
will
res
ult
in c
om
pet
itiv
e d
isad
van
tage
. d
isad
van
tage
.
10
McKinseyQuarterly 2005: Value and
Performance
Source:http://www.mckinsey.com
According to a McKinsey survey of more than 1,000
According to a McKinsey survey of more than 1,000
directors around the world:
directors around the world:
��M
any
bo
ard
mem
ber
s ar
e fr
ust
rate
d b
y th
eir
com
pan
ies'
M
any
bo
ard
mem
ber
s ar
e fr
ust
rate
d b
y th
eir
com
pan
ies'
ex
cess
ive
focu
s o
n s
ho
rtex
cess
ive
focu
s o
n s
ho
rt-- t
erm
fin
anci
al p
erfo
rman
ce
term
fin
anci
al p
erfo
rman
ce
��P
refe
r to
dev
ote
mo
re t
ime
to lo
ng
Pre
fer
to d
evo
te m
ore
tim
e to
lon
g-- t
erm
issu
es, s
uch
as
stra
tegy
te
rm is
sues
, su
ch a
s st
rate
gy
and
lead
ersh
ip d
evel
op
men
t an
d le
ader
ship
dev
elo
pm
ent
��D
irec
tors
lac
k th
e in
form
atio
n f
or
sou
nd
dec
isio
n m
akin
g an
d
Dir
ecto
rs l
ack
the
info
rmat
ion
fo
r so
un
d d
ecis
ion
mak
ing
and
m
ay n
ot
un
der
stan
d t
he
ob
ject
ives
an
d r
isks
of
thei
r co
mp
anie
s m
ay n
ot
un
der
stan
d t
he
ob
ject
ives
an
d r
isks
of
thei
r co
mp
anie
s
��B
oar
d o
vers
igh
t w
ill i
mp
rove
on
ly if
dir
ecto
rs c
an d
evel
op
a
Bo
ard
ove
rsig
ht
will
im
pro
ve o
nly
if d
irec
tors
can
dev
elo
p a
m
ore
co
mp
reh
ensi
ve p
ictu
re o
f th
e p
erfo
rman
ce o
f th
eir
mo
re c
om
pre
hen
sive
pic
ture
of
the
per
form
ance
of
thei
r co
mp
anie
s an
d le
arn
to
par
tici
pat
e m
ore
dee
ply
in d
iscu
ssio
ns
com
pan
ies
and
lear
n t
o p
arti
cip
ate
mo
re d
eep
ly in
dis
cuss
ion
s ab
ou
t st
rate
gy a
nd
lead
ersh
ip.
abo
ut
stra
tegy
an
d le
ader
ship
.
11
Corporate Governance: Kumar
Corporate Governance: Kumar
Managalam Birla Committee Report
Managalam Birla Committee Report
DEFINITION:
Fu
nd
amen
tal o
bje
ctiv
e o
f corporate
governance
is t
he "Enhancement
of
Shareholder Value, K
eep
ing
in V
iew
the
Inte
rest
s o
f O
ther
Sta
keh
old
er".
12
Corporate Governance: Kumar
Corporate Governance: Kumar
Managalam Birla Committee Report
Managalam Birla Committee Report
Ab
solu
te S
alar
y le
vels
, ad
just
ed g
row
th
Ab
solu
te S
alar
y le
vels
, ad
just
ed g
row
th
in a
vera
ge a
nn
ual
sal
arie
s; E
SO
Ps;
in
ave
rage
an
nu
al s
alar
ies;
ES
OP
s;
Att
riti
on
rat
es; I
nta
ngi
ble
s et
c.A
ttri
tio
n r
ates
; In
tan
gib
les
etc.
Em
plo
yees
Em
plo
yees
Mar
ket
Sh
are;
Ass
essm
ent
of
Cu
sto
mer
M
arke
t S
har
e; A
sses
smen
t o
f C
ust
om
er
sati
sfac
tio
n; C
ost
sav
ings
pas
sed
on
to
sa
tisf
acti
on
; Co
st s
avin
gs p
asse
d o
n t
o
cust
om
ers
etc.
cust
om
ers
etc.
Cu
sto
mer
sC
ust
om
ers
Hig
h d
ebt
pro
tect
ion
mea
sure
s H
igh
deb
t p
rote
ctio
n m
easu
res
––cr
edit
cr
edit
rati
ng;
up
grad
es i
n r
atin
gs e
tc.
rati
ng;
up
grad
es i
n r
atin
gs e
tc.
Deb
t H
old
ers
Deb
t H
old
ers
Ret
urn
on
in
vest
ed c
apit
al c
om
par
ed t
o
Ret
urn
on
in
vest
ed c
apit
al c
om
par
ed t
o
wei
ghte
d a
vera
ge
cost
of
cap
ital
, w
eigh
ted
ave
rage
co
st o
f ca
pit
al,
pay
ou
t ra
tio
etc
. p
ayo
ut
rati
o e
tc.
Maj
ori
ty /
Min
ori
ty
Maj
ori
ty /
Min
ori
ty
Sta
keh
old
ers
Sta
keh
old
ers
13
Corporate Governance: Kumar
Corporate Governance: Kumar
Managalam Birla Committee Report
Managalam Birla Committee Report
To
tal
dir
ect
taxe
s p
aid
; Em
plo
ymen
t T
ota
l d
irec
t ta
xes
pai
d; E
mp
loym
ent
gen
erat
ed; E
xpen
dit
ure
on
so
cial
ge
ner
ated
; Exp
end
itu
re o
n s
oci
al
infr
astr
uct
ure
; En
viro
nm
enta
l./S
oci
al
infr
astr
uct
ure
; En
viro
nm
enta
l./S
oci
al
imp
act
cost
; Fai
r p
ract
ices
fo
llow
ed e
tc.
imp
act
cost
; Fai
r p
ract
ices
fo
llow
ed e
tc.
So
ciet
yS
oci
ety
Rel
ativ
e ch
ange
in
cre
dit
ter
ms;
Pas
sin
g R
elat
ive
chan
ge i
n c
red
it t
erm
s; P
assi
ng
on
in
crea
sed
rea
lizat
ion
; o
n i
ncr
ease
d r
ealiz
atio
n;
Su
pp
ort
/In
tan
gib
les
to s
up
plie
rs, e
tc.
Su
pp
ort
/In
tan
gib
les
to s
up
plie
rs, e
tc.
Su
pp
liers
Su
pp
liers
14
Corporate Governance: Kumar
Corporate Governance: Kumar
Managalam Birla Committee Report
Managalam Birla Committee Report
��S
tro
ng
Str
on
g corporate
corporategovernance
governance
is t
hu
s in
dis
pen
sab
le t
o
is t
hu
s in
dis
pen
sab
le t
o
resi
lien
t an
d v
ibra
nt
cap
ital
mar
kets
resi
lien
t an
d v
ibra
nt
cap
ital
mar
kets
��It
is
an i
mp
ort
ant
inst
rum
ent
of
inve
sto
r p
rote
ctio
n
It i
s an
im
po
rtan
t in
stru
men
t o
f in
vest
or
pro
tect
ion
��It
is
the
blo
od
th
at f
ills
the
vein
s o
f tr
ansp
aren
t It
is
the
blo
od
th
at f
ills
the
vein
s o
f tr
ansp
aren
t corporate
corporate
dis
clo
sure
an
d h
igh
dis
clo
sure
an
d h
igh
-- qu
alit
y ac
cou
nti
ng
qu
alit
y ac
cou
nti
ng
pra
ctic
es
pra
ctic
es
��It
is
the
mu
scle
th
at m
ove
s a
viab
le a
nd
acc
essi
ble
It
is
the
mu
scle
th
at m
ove
s a
viab
le a
nd
acc
essi
ble
fi
nan
cial
rep
ort
ing
stru
ctu
re
fin
anci
al r
epo
rtin
g st
ruct
ure
��W
ith
ou
t fi
nan
cial
rep
ort
ing
pre
mis
ed o
n s
ou
nd
, ho
nes
t W
ith
ou
t fi
nan
cial
rep
ort
ing
pre
mis
ed o
n s
ou
nd
, ho
nes
t n
um
ber
s, c
apit
al m
arke
ts w
ill c
olla
pse
up
on
th
emse
lves
n
um
ber
s, c
apit
al m
arke
ts w
ill c
olla
pse
up
on
th
emse
lves
15
Benefits of Corporate Governance:
Benefits of Corporate Governance:
Mar
kets
an
d i
nve
sto
rs:
Mar
kets
an
d i
nve
sto
rs:
��T
ake
no
tice
of
wel
lT
ake
no
tice
of
wel
l --m
anag
ed c
om
pan
ies,
m
anag
ed c
om
pan
ies,
��T
hey
res
po
nd
po
siti
vely
T
hey
res
po
nd
po
siti
vely
��R
ewar
d s
uch
co
mp
anie
s, w
ith
hig
her
val
uat
ion
s.
Rew
ard
su
ch c
om
pan
ies,
wit
h h
igh
er v
alu
atio
ns.
��C
om
pan
ies
wit
h b
ette
r go
vern
ance
pre
sen
t le
ss a
gen
cy r
isk
to s
ha
Co
mp
anie
s w
ith
bet
ter
gove
rnan
ce p
rese
nt
less
age
ncy
ris
k to
sh
a reh
old
ers,
re
ho
lder
s,
resu
ltin
g in
a l
ow
er c
ost
of
equ
ity
cap
ital
re
sult
ing
in a
lo
wer
co
st o
f eq
uit
y ca
pit
al ##
��R
esea
rch
exa
min
ing
the
link
bet
wee
n c
orp
ora
te g
ove
rnan
ce a
nd
bo
nR
esea
rch
exa
min
ing
the
link
bet
wee
n c
orp
ora
te g
ove
rnan
ce a
nd
bo
nd
yie
lds
d y
ield
s fo
un
d t
hat
go
vern
ance
mec
han
ism
s ca
n h
elp
red
uce
age
ncy
ris
k as
fo
un
d t
hat
go
vern
ance
mec
han
ism
s ca
n h
elp
red
uce
age
ncy
ris
k as
w
ell
as
wel
l as
in
form
atio
n r
isk
by
ind
uci
ng
firm
s to
dis
clo
se i
nfo
rmat
ion
in
a
info
rmat
ion
ris
k b
y in
du
cin
g fi
rms
to d
iscl
ose
in
form
atio
n i
n a
tim
ely
man
ner
, ti
mel
y m
ann
er,
resu
ltin
g in
hig
her
bo
nd
rat
ings
an
d l
ow
er b
on
d y
ield
s re
sult
ing
in h
igh
er b
on
d r
atin
gs a
nd
lo
wer
bo
nd
yie
lds
##
A common feature of such companies is that they have systems in place
, wh
ich
, w
hic
h
allo
w s
uff
icie
nt
free
do
m t
o t
he
bo
ard
s an
d m
anag
emen
t to
tak
e d
eal
low
su
ffic
ien
t fr
eed
om
to
th
e b
oar
ds
and
man
agem
ent
to t
ake
de c
isio
ns
tow
ard
s th
e ci
sio
ns
tow
ard
s th
e p
rogr
ess
of
thei
r co
mp
anie
s an
d t
o in
no
vate
, wh
ile r
emai
nin
g w
itp
rogr
ess
of
thei
r co
mp
anie
s an
d t
o in
no
vate
, wh
ile r
emai
nin
g w
ith
in a
fra
mew
ork
of
hin
a f
ram
ewo
rk o
f ef
fect
ive
acco
un
tab
ility
. In
oth
er w
ord
s th
ey h
ave
a sy
stem
of
gef
fect
ive
acco
un
tab
ility
. In
oth
er w
ord
s th
ey h
ave
a sy
stem
of
go
od
o
od
corporate
corporate
governance
governance
. .
# Source: Survey by GOVERNANCEMETRICS INTERNATIONAL INC (GMI) 2006
16
Link between Corporate
Governance, ROE, ROA and ROC
17
Principles of Good Corporate
Principles of Good Corporate
Governance
Governance
��L
ay S
olid
Fo
un
dat
ion
s fo
r M
anag
emen
t an
d O
vers
igh
tL
ay S
olid
Fo
un
dat
ion
s fo
r M
anag
emen
t an
d O
vers
igh
t��
Fo
rmal
ize
fun
ctio
ns
rese
rved
to
Bo
ard
& D
eleg
ated
to
Mgm
tF
orm
aliz
e fu
nct
ion
s re
serv
ed t
o B
oar
d &
Del
egat
ed t
o M
gmt
��E
nsu
re b
alan
ce b
etw
een
Ch
airp
erso
n, I
nd
epen
den
t E
nsu
re b
alan
ce b
etw
een
Ch
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irec
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CE
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tru
ctu
re t
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ard
to
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d V
alu
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ctu
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ard
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alu
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ty o
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dep
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ent
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ecto
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tors
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dep
end
ent
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anIn
dep
end
ent
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of
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sam
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ot
sam
e
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xist
ence
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s co
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xist
ence
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vari
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s co
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es
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ote
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ical
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d R
esp
on
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le D
ecis
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lish
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de
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ecu
rity
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din
g P
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ies
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uri
ty T
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ing
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licie
s
# Source: Australian Stock Exchange
18
Principles of Good Corporate
Principles of Good Corporate
Governance
Governance
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afeg
uar
d I
nte
grit
y in
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anci
al R
epo
rtin
gS
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uar
d I
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grit
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anci
al R
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rtin
g
��C
EO
/C
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Rep
ort
to
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ard
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rt t
o B
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d
��E
stab
lish
Au
dit
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mm
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lish
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dit
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mm
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e
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tru
ctu
re o
f th
e A
ud
it C
om
mit
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ure
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dit
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mm
itte
e
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har
ter
of
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dit
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eC
har
ter
of
Au
dit
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mm
itte
e
��R
epo
rtin
g in
Co
rp G
ov
Sec
tio
nR
epo
rtin
g in
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rp G
ov
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tio
n
��M
ake
Tim
ely
and
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ance
d D
iscl
osu
reM
ake
Tim
ely
and
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ance
d D
iscl
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re
��P
olic
ies
& P
roce
du
res
to e
nsu
re d
iscl
osu
re c
om
plia
nce
Po
licie
s &
Pro
ced
ure
s to
en
sure
dis
clo
sure
co
mp
lian
ce
��R
epo
rtin
g o
f al
l d
epar
ture
sR
epo
rtin
g o
f al
l d
epar
ture
s
# Source: Australian Stock Exchange
19
Principles of Good Corporate
Principles of Good Corporate
Governance
Governance
��R
esp
ect
the
Rig
hts
of
Shar
eho
lder
sR
esp
ect
the
Rig
hts
of
Shar
eho
lder
s
��E
stab
lish
& P
ub
lish
Co
mm
un
icat
ion
str
ateg
yE
stab
lish
& P
ub
lish
Co
mm
un
icat
ion
str
ateg
y
��M
ain
ten
ance
of
Web
site
Mai
nte
nan
ce o
f W
ebsi
te
��R
eco
gniz
e an
d M
anag
e R
isk
Rec
ogn
ize
and
Man
age
Ris
k
��A
C t
o o
vers
igh
t R
M P
roce
ssA
C t
o o
vers
igh
t R
M P
roce
ss
��C
OE
/ C
FA
rep
ort
ing
CO
E /
CF
A r
epo
rtin
g ––
Ris
ks /
Co
ntr
ol A
ssu
ran
ceR
isks
/ C
on
tro
l Ass
ura
nce
��E
nco
ura
ge E
nh
ance
d P
erfo
rman
ceE
nco
ura
ge E
nh
ance
d P
erfo
rman
ce
��P
erfo
rman
ce e
valu
atio
n o
f B
oar
d/
Co
mm
itte
es /
P
erfo
rman
ce e
valu
atio
n o
f B
oar
d/
Co
mm
itte
es /
In
dep
end
ent
Dir
ecto
rs/
Key
Exe
cuti
ves
Ind
epen
den
t D
irec
tors
/ K
ey E
xecu
tive
s
# Source: Australian Stock Exchange
20
Principles of Good Corporate
Principles of Good Corporate
Governance
Governance
��R
emu
ner
ate
Fai
rly
and
Res
po
nsi
bly
Rem
un
erat
e F
airl
y an
d R
esp
on
sib
ly
��R
emu
ner
atio
n p
olic
ies
to u
nd
erst
and
th
e co
st &
R
emu
ner
atio
n p
olic
ies
to u
nd
erst
and
th
e co
st &
ben
efit
ben
efit
��L
inka
ge o
f re
mu
ner
atio
n w
ith
per
form
ance
Lin
kage
of
rem
un
erat
ion
wit
h p
erfo
rman
ce
��R
eco
gniz
e th
e L
egit
imat
e In
tere
st o
f R
eco
gniz
e th
e L
egit
imat
e In
tere
st o
f
Stak
eho
lder
sSt
akeh
old
ers
��C
OC
wit
h l
egal
& o
blig
atio
ns
for
stak
eho
lder
sC
OC
wit
h l
egal
& o
blig
atio
ns
for
stak
eho
lder
s
# Source: Australian Stock Exchange
21
Overview of Global
Overview of Global
Corporate Governance
Corporate Governance
Trends
Trends
22
Global Corporate Governance
Global Corporate Governance
Regulations
Regulations
All
exce
pt
Ger
man
y,
All
exce
pt
Ger
man
y,
Jap
an, M
exic
o, S
. Ja
pan
, Mex
ico
, S.
Afr
ica,
Sp
ain
, In
dia
Afr
ica,
Sp
ain
, In
dia
An
nu
al s
elf
An
nu
al s
elf --
asse
ssm
ent
asse
ssm
ent
of
bo
ard
o
f b
oar
d
per
form
ance
req
uir
edp
erfo
rman
ce r
equ
ired
All
exce
pt
Au
stra
lia,
All
exce
pt
Au
stra
lia,
Mex
ico
, S. A
fric
a,
Mex
ico
, S. A
fric
a,
Ind
iaIn
dia
Co
mp
ensa
tio
n c
om
mit
tee
Co
mp
ensa
tio
n c
om
mit
tee
mu
st b
e m
ust
be
com
po
sed
of
ind
epen
den
t m
emb
ers
com
po
sed
of
ind
epen
den
t m
emb
ers
All
cou
ntr
ies
All
cou
ntr
ies
Po
rtio
n o
f th
e b
oar
d o
f d
irec
tors
wh
ich
P
ort
ion
of
the
bo
ard
of
dir
ecto
rs w
hic
h
mu
st b
e m
ust
be
ind
epen
den
t in
dep
end
ent
(i.e
. maj
ori
ty o
f (i
.e. m
ajo
rity
of
the
bo
ard
, at
leas
t th
ree
mem
ber
s, e
tc.)
the
bo
ard
, at
leas
t th
ree
mem
ber
s, e
tc.)
Country
Country
Board Member Roles &
Board Member Roles &
Responsibilities
Responsibilities
23
Global Corporate Governance
Global Corporate Governance
Regulations
Regulations
Ger
man
y, M
exic
o, U
S,
Ger
man
y, M
exic
o, U
S,
Ind
ia, C
hin
aIn
dia
, Ch
ina
Req
uir
ed t
o h
ave
auth
ori
ty
Req
uir
ed t
o h
ave
auth
ori
ty t
o e
nga
ge o
uts
ide
to e
nga
ge o
uts
ide
advi
sers
advi
sers
UK
, US
, In
dia
UK
, US
, In
dia
Req
uir
ed t
o e
stab
lish
pro
ced
ure
s to
rec
eive
R
equ
ired
to
est
ablis
h p
roce
du
res
to r
ecei
ve
acco
un
tin
g, a
ud
itin
g, a
nd
sim
ilar
acco
un
tin
g, a
ud
itin
g, a
nd
sim
ilar
com
pla
ints
co
mp
lain
ts
fro
m e
mp
loye
esfr
om
em
plo
yees
UK
, US
, In
dia
UK
, US
, In
dia
Req
uir
ed t
o e
stab
lish
pro
ced
ure
s to
rec
eive
R
equ
ired
to
est
ablis
h p
roce
du
res
to r
ecei
ve
acco
un
tin
g, a
ud
itin
g, a
nd
sim
ilar
acco
un
tin
g, a
ud
itin
g, a
nd
sim
ilar
com
pla
ints
co
mp
lain
ts
fro
m t
ho
se o
uts
ide
the
com
pan
yfr
om
th
ose
ou
tsid
e th
e co
mp
any
All
cou
ntr
ies
exce
pt
S.
All
cou
ntr
ies
exce
pt
S.
Afr
ica
Afr
ica
Au
dit
co
mm
itte
e re
qu
ired
to
hav
e re
spo
nsi
bili
ty
Au
dit
co
mm
itte
e re
qu
ired
to
hav
e re
spo
nsi
bili
ty
for
hir
ing,
ter
min
atin
g, a
nd
fo
r h
irin
g, t
erm
inat
ing,
an
d o
vers
eein
g w
ork
of
ove
rsee
ing
wo
rk o
f
ind
epen
den
t au
dit
or
ind
epen
den
t au
dit
or
Country
Country
Audit Committee Roles and
Audit Committee Roles and
Responsibilities
Responsibilities
24
Global Corporate Governance
Global Corporate Governance
Regulations
Regulations
All
exce
pt
Ger
man
y, J
apan
, A
ll ex
cep
t G
erm
any,
Jap
an,
Mex
ico
, Sp
ain
, US
, In
dia
(n
ot
Mex
ico
, Sp
ain
, US
, In
dia
(n
ot
man
dat
ory
bu
t re
com
men
ded
),m
and
ato
ry b
ut
reco
mm
end
ed),
Req
uir
ed
Req
uir
ed s
epar
atio
n o
f ch
ief
exec
uti
ve a
nd
se
par
atio
n o
f ch
ief
exec
uti
ve a
nd
chai
rman
of
the
bo
ard
ro
les
chai
rman
of
the
bo
ard
ro
les
All
exce
pt
Au
stra
lia, J
apan
, A
ll ex
cep
t A
ust
ralia
, Jap
an,
Mex
ico
, Ru
ssia
, S. A
fric
aM
exic
o, R
uss
ia, S
. Afr
ica
Pro
hib
itio
n o
n l
oan
sP
roh
ibit
ion
on
lo
ans
to o
ffic
ers
and
to
off
icer
s an
d
dir
ecto
rsd
irec
tors
All
exce
pt
Ger
man
y, R
uss
ia, S
. A
ll ex
cep
t G
erm
any,
Ru
ssia
, S.
Afr
ica,
Sp
ain
, Ch
ina
(Bo
ard
A
fric
a, S
pai
n, C
hin
a (B
oar
d
cert
ifie
s); J
apan
cert
ifie
s); J
apan
--p
rop
ose
dp
rop
ose
d
Man
agem
ent
req
uir
ed t
o
Man
agem
ent
req
uir
ed t
o c
erti
fy i
nte
rnal
ce
rtif
y in
tern
al
con
tro
l st
ruct
ure
an
d/
or
dis
clo
sure
co
ntr
ols
con
tro
l st
ruct
ure
an
d/
or
dis
clo
sure
co
ntr
ols
All
exce
pt
Ru
ssia
, S. A
fric
a, S
pai
nA
ll ex
cep
t R
uss
ia, S
. Afr
ica,
Sp
ain
Man
agem
ent
req
uir
ed t
o
Man
agem
ent
req
uir
ed t
o c
erti
fy &
/o
r ce
rtif
y &
/o
r
rep
ort
on
fi
nan
cial
sta
tem
ent
accu
racy
rep
ort
on
fi
nan
cial
sta
tem
ent
accu
racy
Ger
man
y an
d U
S;
Ger
man
y an
d U
S;
Man
agem
ent
req
uir
ed t
o
Man
agem
ent
req
uir
ed t
o f
orf
eit
bo
nu
ses
or
forf
eit
bo
nu
ses
or
oth
er c
om
pen
sati
on
if
a re
stat
emen
t o
ccu
rso
ther
co
mp
ensa
tio
n i
f a
rest
atem
ent
occ
urs
Country
Country
Management Roles and Responsibilities
Management Roles and Responsibilities
25
Global Corporate Governance
Global Corporate Governance
Regulations
Regulations
Fra
nce
, Ger
man
y, M
exic
o
Fra
nce
, Ger
man
y, M
exic
o
(on
ly r
eco
mm
end
ed, n
ot
(on
ly r
eco
mm
end
ed, n
ot
req
uir
ed),
UK
(al
tho
ugh
no
t a
req
uir
ed),
UK
(al
tho
ugh
no
t a
pu
blic
rep
ort
), U
S, I
nd
ia,
pu
blic
rep
ort
), U
S, I
nd
ia,
Ch
ina
Ch
ina
Au
dit
or
req
uir
ed t
o
Au
dit
or
req
uir
ed t
o a
ttes
t to
man
agem
ent
atte
st t
o m
anag
emen
t ’’s
rep
ort
on
s
rep
ort
on
inte
rnal
co
ntr
ol
inte
rnal
co
ntr
ol
No
ne
No
ne
Man
dat
ory
M
and
ato
ry a
ud
it f
irm
ro
tati
on
aud
it f
irm
ro
tati
on
All
exce
pt
Ru
ssia
, In
dia
All
exce
pt
Ru
ssia
, In
dia
Req
uir
ed
Req
uir
ed r
ota
tio
n o
f au
dit
par
tner
sro
tati
on
of
aud
it p
artn
ers
US,
Mex
ico
, So
uth
Afr
ica
US,
Mex
ico
, So
uth
Afr
ica
Req
uir
ed a
ud
it c
om
mit
tee
Req
uir
ed a
ud
it c
om
mit
tee
pre
app
rova
l of
no
np
reap
pro
val o
f n
on
-- au
dit
au
dit
serv
ices
se
rvic
es
All
cou
ntr
ies
All
cou
ntr
ies
Pro
hib
itio
ns
on
th
e P
roh
ibit
ion
s o
n t
he
aud
ito
rau
dit
or ’’
s sc
op
e o
f se
rvic
ess
sco
pe
of
serv
ices
Country
Country
Auditor Independence
Auditor Independence
26
Global Corporate Governance
Global Corporate Governance
Regulations
Regulations A
ust
ralia
, UK
, In
dia
Au
stra
lia, U
K, I
nd
iaR
ule
s re
gard
ing
Ru
les
rega
rdin
g d
iscl
osu
re o
f fo
rwar
d
dis
clo
sure
of
forw
ard
loo
kin
g ea
rnin
gs g
uid
ance
loo
kin
g ea
rnin
gs g
uid
ance
Can
ada,
Mex
ico
, US,
C
anad
a, M
exic
o, U
S,
Ind
iaIn
dia
Ru
les
rega
rdin
g R
ule
s re
gard
ing
dis
clo
sure
of
fin
anci
al
dis
clo
sure
of
fin
anci
al
mea
sure
s co
mp
ute
d o
n a
bas
is o
ther
m
easu
res
com
pu
ted
on
a b
asis
oth
er
than
GA
AP
than
GA
AP
All
exce
pt
Mex
ico
, A
ll ex
cep
t M
exic
o,
Ru
ssia
, S. A
fric
a,
Ru
ssia
, S. A
fric
a,
Spai
n, I
nd
ia, C
hin
aSp
ain
, In
dia
, Ch
ina
Ru
les
rega
rdin
g R
ule
s re
gard
ing
dis
clo
sure
of
off
dis
clo
sure
of
off
--
bal
ance
sh
eet
tran
sact
ion
s an
d
bal
ance
sh
eet
tran
sact
ion
s an
d
con
trac
tual
ob
ligat
ion
sco
ntr
actu
al o
blig
atio
ns
Country
Country
Disclosure
Disclosure
27
Overview of legislations for
Corporate Governance and
Reporting Requirements
28
Overview of legislations for
Corporate Governance
��Se
ttin
g u
p o
f in
tern
atio
nal
co
mm
itte
es f
or
Sett
ing
up
of
inte
rnat
ion
al c
om
mit
tees
fo
r
Co
rpo
rate
Go
vern
ance
su
ch a
s C
adb
ury
, C
orp
ora
te G
ove
rnan
ce s
uch
as
Cad
bu
ry,
Gre
enb
ury
& T
urn
bu
ll co
mm
itte
es in
UK
.G
reen
bu
ry &
Tu
rnb
ull
com
mit
tees
in U
K.
��Sa
rban
es O
xley
Act
(SO
X).
Sarb
anes
Oxl
ey A
ct (
SOX
).
��In
In
dia
In
In
dia
--K
um
aram
anga
lam
Bir
la c
om
mit
tee
, K
um
aram
anga
lam
Bir
la c
om
mit
tee
,
Nar
esh
Ch
and
ra c
om
mit
tee
and
Nar
ayan
mu
rth
y N
ares
h C
han
dra
co
mm
itte
e an
d N
aray
anm
urt
hy
com
mit
tee.
com
mit
tee.
��C
lau
se 4
9 o
f lis
tin
g ag
reem
ent
Cla
use
49
of
listi
ng
agre
emen
t ––
SEB
I (i
n li
ne
SEB
I (i
n li
ne
wit
h S
OX
)w
ith
SO
X)
29
SOX-A Snap…
��Ju
ly 2
5, 2002
July
25, 2002 ––
pas
ses both
house
s of Congre
ss
pas
ses both
house
s of Congre
ss
��Ju
ly 3
0, 2002
July
30, 2002 ––
Pre
siden
t Bush
sig
ns in
to law
Pre
siden
t Bush
sig
ns in
to law
��Pro
vid
es c
larity
(su
bje
ct to rule
mak
ing b
y S
EC) by:
Pro
vid
es c
larity
(su
bje
ct to rule
mak
ing b
y S
EC) by:
��Est
ablish
ing P
CA
OB
Est
ablish
ing P
CA
OB --
an indep
enden
t, full
an indep
enden
t, full-- tim
e over
sight
tim
e over
sight
boar
d
boar
d
��Est
ablish
ing res
ponsi
bilitie
s fo
r au
dit c
om
mitte
es a
nd
Est
ablish
ing res
ponsi
bilitie
s fo
r au
dit c
om
mitte
es a
nd
offic
ers
offic
ers
��Est
ablish
ing c
ertifica
tion req
uirem
ents b
y C
EO
and C
FO
Est
ablish
ing c
ertifica
tion req
uirem
ents b
y C
EO
and C
FO
��Stren
gth
enin
g p
enal
ties
for co
rpora
te fra
ud
Stren
gth
enin
g p
enal
ties
for co
rpora
te fra
ud
��Req
uirin
g rule
s to
addre
ss a
nal
yst
conflic
t of in
tere
stReq
uirin
g rule
s to
addre
ss a
nal
yst
conflic
t of in
tere
st
��Sig
nific
antly e
nhan
cing the
SEC
Sig
nific
antly e
nhan
cing the
SEC
’’ s p
ow
ers
s pow
ers
Clause 49 of Listing A
gre
emen
t modified by
SEBI to include above co
nce
pts !!!!
30
Summary
of Section 404
Req
uirem
ents
The SEC recently finalized its rules related to Section 404 of t
The SEC recently finalized its rules related to Section 404 of t he Sarbanes
he Sarbanes--
Oxley Act (
Oxley Act (““SOX
SOX””) requiring each annual report (including Form 10
) requiring each annual report (including Form 10 --K K
and Form 20
and Form 20-- F) to contain an internal control report as follows:
F) to contain an internal control report as follows:
��A statement of management
A statement of management ’’s responsibilities for
s responsibilities for
establishing and maintaining adequate internal controls
establishing and maintaining adequate internal controls
over financial reporting;
over financial reporting;
��A statement identifying the framework used by
A statement identifying the framework used by
management as criteria for evaluating the effectiveness
management as criteria for evaluating the effectiveness
of internal control over financial reporting;
of internal control over financial reporting;
��Contd.
Contd.
31
Summary
of Section 404
Req
uirem
ents contd
..
��Management
Management ’’s assessment of the effectiveness of
s assessment of the effectiveness of
internal control as of the end of the company
internal control as of the end of the company’’ s most
s most
recent year (point
recent year (point --inin-- time
assessment), including
time
assessment), including
disclosure of any material weakness in the company
disclosure of any material weakness in the company’’ s s
internal control identified by management (*); and,
internal control identified by management (*); and,
��A statement that the registered public accounting firm
A statement that the registered public accounting firm
that audited the financial statements included in the
that audited the financial statements included in the
annual report has also issued an attestation report on
annual report has also issued an attestation report on
management
management ’’s assessment of internal control over
s assessment of internal control over
financial reporting
financial reporting..
��This requirement is now
This requirement is now l
awlaw. The internal control report is
. The internal control report is
required annually and is
required annually and is
in
add
itio
n
in
add
itio
n to the CEO/CFO
to the CEO/CFO
Certifications required under Sections 302 and 906.
Certifications required under Sections 302 and 906.
32
Reportable Conditions: PCAOB
Spec
ific
ally
, th
ese
are
mat
ters
co
min
g to
th
e au
dit
or'
s Sp
ecif
ical
ly, t
hes
e ar
e m
atte
rs c
om
ing
to t
he
aud
ito
r's
atte
nti
on
th
at, i
n h
is ju
dgm
ent,
sh
ou
ld b
e at
ten
tio
n t
hat
, in
his
jud
gmen
t, s
ho
uld
be
com
mu
nic
ated
to
th
e au
dit
co
mm
itte
e b
ecau
se t
hey
co
mm
un
icat
ed t
o t
he
aud
it c
om
mit
tee
bec
ause
th
ey
rep
rese
nt
rep
rese
nt significant deficiencies in the design or
significant deficiencies in the design or
operation of internal control
operation of internal control ,
wh
ich
co
uld
, w
hic
h c
ou
ld adversely
adversely
affect the organization's ability to initiate, record,
affect the organization's ability to initiate, record,
process, and report financial data
process, and report financial data
con
sist
ent
wit
h
con
sist
ent
wit
h
the assertions
the assertions
of
man
agem
ent
in t
he
fin
anci
al
of
man
agem
ent
in t
he
fin
anci
al
stat
emen
ts.
stat
emen
ts.
33
Reportable Conditions: PCAOB
Auditing Standard No. 5
��Id
enti
fied
All
Mat
eria
l Wea
knes
ses
to m
anag
emen
t Id
enti
fied
All
Mat
eria
l Wea
knes
ses
to m
anag
emen
t
and
th
e au
dit
co
mm
itte
ean
d t
he
aud
it c
om
mit
tee
��C
on
clu
sio
n t
hat
th
e o
vers
igh
t o
f th
e co
mp
any'
s C
on
clu
sio
n t
hat
th
e o
vers
igh
t o
f th
e co
mp
any'
s
exte
rnal
fin
anci
al r
epo
rtin
g an
d in
tern
al c
on
tro
l ove
r ex
tern
al f
inan
cial
rep
ort
ing
and
inte
rnal
co
ntr
ol o
ver
fin
anci
al r
epo
rtin
g b
y th
e co
mp
any'
s au
dit
co
mm
itte
e fi
nan
cial
rep
ort
ing
by
the
com
pan
y's
aud
it c
om
mit
tee
is in
effe
ctiv
e to
th
e B
oar
d in
wri
tin
gis
inef
fect
ive
to t
he
Bo
ard
in w
riti
ng
��Id
enti
fied
Id
enti
fied
significant deficiencies
significant deficiencies
(sin
gle
/
(sin
gle
/
com
bin
atio
n)
to t
he
Au
dit
Co
mm
itte
e co
mb
inat
ion
) to
th
e A
ud
it C
om
mit
tee
SOURCE: Auditing Standard No. 5 –An Audit of Internal Control Over Financial Reporting That Is
Integrated with An Audit of Financial Statements issued by PCAOBon June 12, 2007
34
Reportable Conditions: PCAOB
Auditing Standard No. 5
��A
ll d
efic
ien
cies
in
in
tern
al c
on
tro
l o
ver
fin
anci
al
All
def
icie
nci
es i
n i
nte
rnal
co
ntr
ol
ove
r fi
nan
cial
rep
ort
ing
(of
less
er m
agn
itu
de
than
Mat
eria
l re
po
rtin
g (o
f le
sser
mag
nit
ud
e th
an M
ater
ial
Wea
knes
s) t
o t
he
man
agem
ent
Wea
knes
s) t
o t
he
man
agem
ent
��F
rau
d o
r p
oss
ible
ille
gal a
cts
det
ecte
d s
ho
uld
be
Fra
ud
or
po
ssib
le i
llega
l act
s d
etec
ted
sh
ou
ld b
e
com
mu
nic
ated
as
per
AU
sec
. 316
, co
mm
un
icat
ed a
s p
er A
U s
ec. 3
16, Consideration of
Consideration of
Fraud in a Financial Statement Audit
Fraud in a Financial Statement Audit
, AU
sec
. 317
, , A
U s
ec. 3
17, Illegal
Illegal
Acts by Clients
Acts by Clients ,
an
d S
ecti
on
10A
of
the
Secu
riti
es
, an
d S
ecti
on
10A
of
the
Secu
riti
es
Exc
han
ge A
ct o
f 19
34
Exc
han
ge A
ct o
f 19
34
SOURCE: Auditing Standard No. 5 –An Audit of Internal Control Over Financial Reporting That Is
Integrated with An Audit of Financial Statements issued by PCAOBon June 12, 2007
35
Requirements of amended Clause 49
of the listing agreement……….
Part V of the Annexure I to the circular SEBI/CFD/DIL/CG/1/2004/
Part V of the Annexure I to the circular SEBI/CFD/DIL/CG/1/2004/12/10 dated
12/10 dated
October 29, 2004 requires
October 29, 2004 requires CEO/CFO certification as below:
CEO/CFO certification as below:
Th
e C
EO
, i.e
. th
e M
anag
ing
Dir
ecto
r o
r M
anag
er
app
oin
ted
in
te
rmT
he
CE
O,
i.e.
the
Man
agin
g D
irec
tor
or
Man
ager
ap
po
inte
d
in
term
s o
f th
e s
of
the
Co
mp
anie
s A
ct,
1956
an
d t
he
CF
O i
.e.
the
wh
ole
Co
mp
anie
s A
ct,
1956
an
d t
he
CF
O i
.e.
the
wh
ole
-- tim
e F
inan
ce D
irec
tor
or
any
oth
er
tim
e F
inan
ce D
irec
tor
or
any
oth
er
per
son
hea
din
g th
e fi
nan
ce f
un
ctio
n d
isch
argi
ng
that
fu
nct
ion
sh
per
son
hea
din
g th
e fi
nan
ce f
un
ctio
n d
isch
argi
ng
that
fu
nct
ion
sh
all
cert
ify
to t
he
all
cert
ify
to t
he
Bo
ard
th
at:
Bo
ard
th
at:
(a)
Th
ey h
ave
revi
ewed
fin
anci
al s
tate
men
ts a
nd
th
e ca
sh f
low
st
(a)
Th
ey h
ave
revi
ewed
fin
anci
al s
tate
men
ts a
nd
th
e ca
sh f
low
st a
tem
ent
for
the
year
at
emen
t fo
r th
e ye
ar
and
th
at t
o t
he
bes
t o
f th
eir
kno
wle
dge
an
d b
elie
f :
and
th
at t
o t
he
bes
t o
f th
eir
kno
wle
dge
an
d b
elie
f :
��th
ese
stat
emen
ts d
o n
ot
con
tain
an
y m
ater
ially
un
tru
e st
atem
ent
thes
e st
atem
ents
do
no
t co
nta
in a
ny
mat
eria
lly u
ntr
ue
stat
emen
t o
r o
mit
an
y o
r o
mit
an
y m
ater
ial f
act
or
con
tain
sta
tem
ents
th
at m
igh
t b
e m
isle
adin
g;m
ater
ial f
act
or
con
tain
sta
tem
ents
th
at m
igh
t b
e m
isle
adin
g;
��th
ese
stat
emen
ts t
oge
ther
pre
sen
t a
tru
e an
d f
air
view
of
the
coth
ese
stat
emen
ts t
oge
ther
pre
sen
t a
tru
e an
d f
air
view
of
the
com
pan
ym
pan
y ’’s
affa
irs
s af
fair
s an
d a
re i
n c
om
plia
nce
wit
h e
xist
ing
acco
un
tin
g st
and
ard
s, a
pp
lican
d a
re i
n c
om
plia
nce
wit
h e
xist
ing
acco
un
tin
g st
and
ard
s, a
pp
licab
le l
aws
and
ab
le l
aws
and
re
gula
tio
ns.
regu
lati
on
s.
(b)
Th
ere
are,
(b
) T
her
e ar
e, to the best of their knowledge and belief
to the best of their knowledge and belief ,
no
tra
nsa
ctio
ns
ente
red
,
no
tra
nsa
ctio
ns
ente
red
in
to b
y th
e co
mp
any
du
rin
g th
e ye
ar w
hic
h a
re
into
by
the
com
pan
y d
uri
ng
the
year
wh
ich
are
fraudulent, illegal or violative of the
fraudulent, illegal or violative of the
company
company’’ s code of conduct.
s code of conduct.
36
Requirements of amended Clause 49
of the listing agreement…contd.
(c)
Th
ey
acce
pt
resp
on
sib
ility
fo
r (c
) T
hey
ac
cep
t re
spo
nsi
bili
ty
for establishing
establishing
and
an
d maintaining
maintaining
inte
rnal
in
tern
al
con
tro
ls a
nd
th
at t
hey
hav
e co
ntr
ols
an
d t
hat
th
ey h
ave evaluated
evaluated
the
the effectiveness
effectiveness
of
the
inte
rnal
co
ntr
ol
of
the
inte
rnal
co
ntr
ol
syst
ems
of
the
com
pan
y an
d t
hey
hav
e sy
stem
s o
f th
e co
mp
any
and
th
ey h
ave disclosed
disclosed
to t
he
aud
ito
rs a
nd
th
e A
ud
it
to t
he
aud
ito
rs a
nd
th
e A
ud
it
Co
mm
itte
e,
Co
mm
itte
e, deficiencies
deficiencies
in t
he
in t
he design or operation
design or operation
of
inte
rnal
co
ntr
ols
, if
an
y,
of
inte
rnal
co
ntr
ols
, if
an
y,
of
wh
ich
th
ey a
re a
war
e an
d t
he
step
s th
ey h
ave
take
n o
r p
rop
ose
of
wh
ich
th
ey a
re a
war
e an
d t
he
step
s th
ey h
ave
take
n o
r p
rop
ose
to t
ake
to t
ake to
to
rectify
rectify
thes
e d
efic
ien
cies
.th
ese
def
icie
nci
es.
(d)
Th
ey h
ave
ind
icat
ed t
o t
he
aud
ito
rs a
nd
th
e A
ud
it c
om
mit
tee
(d)
Th
ey h
ave
ind
icat
ed t
o t
he
aud
ito
rs a
nd
th
e A
ud
it c
om
mit
tee
��si
gnif
ican
t ch
ange
s in
inte
rnal
co
ntr
ol d
uri
ng
the
year
;si
gnif
ican
t ch
ange
s in
inte
rnal
co
ntr
ol d
uri
ng
the
year
;
��si
gnif
ican
t ch
ange
s in
acc
ou
nti
ng
po
licie
s d
uri
ng
the
year
an
d t
sign
ific
ant
chan
ges
in a
cco
un
tin
g p
olic
ies
du
rin
g th
e ye
ar a
nd
th
at t
he
hat
th
e sa
me
hav
e b
een
dis
clo
sed
in t
he
no
tes
to t
he
fin
anci
al s
tate
men
tsa
me
hav
e b
een
dis
clo
sed
in t
he
no
tes
to t
he
fin
anci
al s
tate
men
t s; a
nd
s; a
nd
��in
stan
ces
of
sign
ific
ant
frau
d o
f w
hic
h t
hey
hav
e b
eco
me
awar
e a
inst
ance
s o
f si
gnif
ican
t fr
aud
of
wh
ich
th
ey h
ave
bec
om
e aw
are
a nd
th
e n
d t
he
invo
lvem
ent
ther
ein
, if
an
y, o
f th
e m
anag
emen
t o
r an
em
plo
yee
ha
invo
lvem
ent
ther
ein
, if
an
y, o
f th
e m
anag
emen
t o
r an
em
plo
yee
ha v
ing
a vi
ng
a si
gnif
ican
t ro
le in
th
e co
mp
any
sign
ific
ant
role
in t
he
com
pan
y ’’s
inte
rnal
co
ntr
ol s
yste
ms
inte
rnal
co
ntr
ol s
yste
m
37
Directors
Directors’’Responsibility Statement:
Responsibility Statement:
Section 217 (2AA) of the Companies Act, 1956
Section 217 (2AA) of the Companies Act, 1956
38
Reporting Under CARO
Reporting Under CARO--An order issued by
An order issued by
the Central Government of India as per Section 227 (4A)
the Central Government of India as per Section 227 (4A)
of the Companies Act, 1956
of the Companies Act, 1956
REPORTING FRAUD:
wh
eth
er a
ny
frau
d o
n o
r b
y th
e co
mp
any
has
bee
n n
oti
ced
or
rep
ort
ed d
uri
ng
the
year
; If
yes
, th
e n
atu
re a
nd
th
e am
ou
nt
invo
lved
is t
o b
e in
dic
ated
.
REPORTING TRANSACTIONS WITH GROUP COMPANIES:
“has
th
e co
mp
any
gran
ted
an
y lo
ans,
sec
ure
d o
r u
nse
cure
d t
o c
om
pan
ies,
fir
ms
or
oth
er p
arti
es c
ove
red
in t
he
regi
ster
mai
nta
ined
un
der
sec
tio
n 3
01 o
f th
e A
ct. I
f so
, gi
ve t
he
nu
mb
er o
f p
arti
es a
nd
am
ou
nt
invo
lved
in t
he
tran
sact
ion
s….”
“has
th
e co
mp
any
take
n a
ny
loan
s, s
ecu
red
or
un
secu
red
fro
m c
om
pan
ies,
firm
s o
r o
ther
par
ties
co
vere
d in
th
e re
gist
er m
ain
tain
ed u
nd
er s
ecti
on
301
of
the
Act
. If
so,
give
th
e n
um
ber
of
par
ties
an
d a
mo
un
t in
volv
ed in
th
e tr
ansa
ctio
ns…
..”
“wh
eth
er t
ran
sact
ion
s m
ade
in p
urs
uan
ce o
f su
ch c
on
trac
ts o
r ar
ran
gem
ents
hav
e b
een
m
ade
at p
rice
s w
hic
h a
re r
easo
nab
le h
avin
g re
gard
to
th
e p
reva
ilin
g m
arke
t p
rice
s at
th
e re
leva
nt
tim
e…”
39
ADEQUACY OF INTERNAL CONTROLS:
ADEQUACY OF INTERNAL CONTROLS:
��E
xist
ence
of
the
adeq
uat
e in
tern
al c
on
tro
ls s
yste
m
Exi
sten
ce o
f th
e ad
equ
ate
inte
rnal
co
ntr
ols
sys
tem
com
men
sura
te
wit
h
the
size
o
f th
e co
mp
any
and
co
mm
ensu
rate
w
ith
th
e si
ze
of
the
com
pan
y an
d
nat
ure
of
the
bu
sin
ess
for
the
pu
rch
ase
of
inve
nto
ry,
nat
ure
of
the
bu
sin
ess
for
the
pu
rch
ase
of
inve
nto
ry,
fixe
d a
sset
s an
d s
ale
of
goo
ds/
serv
ices
; an
dfi
xed
ass
ets
and
sal
e o
f go
od
s/se
rvic
es; a
nd
��E
xist
ence
of
an i
nte
rnal
au
dit
sys
tem
co
mm
ensu
rate
E
xist
ence
of
an i
nte
rnal
au
dit
sys
tem
co
mm
ensu
rate
wit
h t
he
size
an
d n
atu
re o
f th
e b
usi
nes
s.w
ith
th
e si
ze a
nd
nat
ure
of
the
bu
sin
ess.
Reporting Under CARO
Reporting Under CARO--An order issued by
An order issued by
the Central Government of India as per Section 227 (4A)
the Central Government of India as per Section 227 (4A)
of the Companies Act, 1956
of the Companies Act, 1956
40
Reporting under AAS issued by the
Reporting under AAS issued by the
ICAI in the External Audit Report
ICAI in the External Audit Report
��A
AS
AA
S--
2 an
d t
hu
s th
e re
po
rt o
f th
e st
atu
tory
au
dit
or
stat
es
2 an
d t
hu
s th
e re
po
rt o
f th
e st
atu
tory
au
dit
or
stat
es
that
fin
anci
al s
tate
men
ts a
re t
he
pri
mar
y re
spo
nsi
bili
ty o
f th
at f
inan
cial
sta
tem
ents
are
th
e p
rim
ary
resp
on
sib
ility
of
the
the
““M
anag
emen
tM
anag
emen
t ””
��A
AS
AA
S--
6 re
qu
ires
a s
tatu
tory
au
dit
or
to a
sses
s th
e ri
sks
by
6 re
qu
ires
a s
tatu
tory
au
dit
or
to a
sses
s th
e ri
sks
by
clas
sify
ing
them
into
inh
eren
t, c
on
tro
l an
d d
etec
tio
n r
isks
.cl
assi
fyin
g th
em in
to in
her
ent,
co
ntr
ol a
nd
det
ecti
on
ris
ks.
��T
he
neg
ativ
e o
utc
om
e o
f ri
sk a
sses
smen
t b
y th
e st
atu
tory
T
he
neg
ativ
e o
utc
om
e o
f ri
sk a
sses
smen
t b
y th
e st
atu
tory
aud
ito
r m
ay
lead
to
q
ual
ific
atio
n
in
the
aud
ito
rau
dit
or
may
le
ad
to
qu
alif
icat
ion
in
th
e au
dit
or ’’
s re
po
rt
s re
po
rt
wh
ich
may
be
du
e to
a m
ater
ial
mis
stat
emen
t ei
ther
by
the
wh
ich
may
be
du
e to
a m
ater
ial
mis
stat
emen
t ei
ther
by
the
frau
d o
r th
e co
ntr
ol w
eakn
ess.
fr
aud
or
the
con
tro
l wea
knes
s.
41
Specimen of Reporting: Statutory Audit
Specimen of Reporting: Statutory Audit
Issue:
Issue:
No
nN
on
-- pro
visi
on
by
a C
om
pan
y fo
r a
dem
and
fro
m C
entr
al E
xcis
e p
rovi
sio
n b
y a
Co
mp
any
for
a d
eman
d f
rom
Cen
tral
Exc
ise
Au
tho
riti
es o
f m
ater
ial
amo
un
t A
uth
ori
ties
of
mat
eria
l am
ou
nt
Reporting to Shareholders: Disclaimer of Opinion
Reporting to Shareholders: Disclaimer of Opinion
42
Specimen of Reporting: Internal Audit
Specimen of Reporting: Internal Audit
Issue:
Issue:
Fra
ud
s d
ue
to E
xces
sive
acc
esse
s in
th
e sy
stem
F
rau
ds
du
e to
Exc
essi
ve a
cces
ses
in t
he
syst
em
Reporting to Audit Committee: Detailed Observation
Reporting to Audit Committee: Detailed Observation
43
Board and Management
Structure
44
Board of Directors-(BOD)
�P
rin
cip
le o
f S
epar
atio
n o
f O
wn
ersh
ip a
nd
Man
agem
ent
�D
irec
tors
are
RE
PR
ES
EN
TA
TIV
ES
of
the
shar
eho
lder
s
�T
hey
per
form
a S
TE
WA
RD
SH
IP f
un
ctio
n
�T
hey
bri
ng
to t
he
corp
ora
tio
n a
ran
ge o
f ex
per
ien
ce,
kno
wle
dge
an
d ju
dgm
ent
�R
ole
s &
Res
po
nsi
bili
ties
of
BO
Ds
are
Go
vern
ed b
y:
a) M
erca
nti
le L
aw
b)
Co
mp
any
Law
c) S
EB
I
45
BOD: Clause 49 Requirements
��O
pti
mu
m c
om
bin
atio
n o
f ex
ecu
tive
an
d n
on
Op
tim
um
co
mb
inat
ion
of
exec
uti
ve a
nd
no
n-- e
xecu
tive
ex
ecu
tive
dir
ecto
rs
dir
ecto
rs
��N
o. o
f in
dep
end
ent
dir
ecto
rs is
a f
un
ctio
n o
f st
atu
s o
f N
o. o
f in
dep
end
ent
dir
ecto
rs is
a f
un
ctio
n o
f st
atu
s o
f
the
Ch
airm
an, i
.e. E
xecu
tive
/N
on
the
Ch
airm
an, i
.e. E
xecu
tive
/N
on
-- Exe
cuti
ve
Exe
cuti
ve
��Q
ual
ifie
d a
nd
In
dep
end
ent
Au
dit
Co
mm
itte
eQ
ual
ifie
d a
nd
In
dep
end
ent
Au
dit
Co
mm
itte
e
��M
emb
ers
of
aud
it c
om
mit
tee
shal
l be
fin
anci
ally
lite
rate
M
emb
ers
of
aud
it c
om
mit
tee
shal
l be
fin
anci
ally
lite
rate
and
at
leas
t o
ne
mem
ber
sh
all h
ave
acco
un
tin
g o
r an
d a
t le
ast
on
e m
emb
er s
hal
l hav
e ac
cou
nti
ng
or
rela
ted
fin
anci
al m
anag
emen
t ex
per
tise
re
late
d f
inan
cial
man
agem
ent
exp
erti
se
46
Clause 49: Suggested BOD Structure
BOARD OF
DIRECTORS
-Committees
to be formed
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
SHAREHOLDERS’
COMMITTEE
47
Today’s Business:
��C
om
ple
x th
an e
ver
bef
ore
Co
mp
lex
than
eve
r b
efo
re
��D
ynam
ic
Dyn
amic
��V
olu
min
ou
sV
olu
min
ou
s
��G
lob
alG
lob
al
Intelligent efforts are required in
Intelligent efforts are required in
pulling the information available at
pulling the information available at
operational level to strategic level in
operational level to strategic level in
a objective manner
a objective manner
48
Information Systems:
��C
om
ple
xC
om
ple
x
��R
elat
ion
al D
atab
ase
Sys
tem
s (E
RP
s)R
elat
ion
al D
atab
ase
Sys
tem
s (E
RP
s)
��R
eal t
ime
Rea
l tim
e
��A
cces
s to
glo
bal
dat
aA
cces
s to
glo
bal
dat
a
��D
ynam
icD
ynam
ic
��V
uln
erab
leV
uln
erab
le
49
Desired Mgmt. Reporting Structure
Tone at
the TOP
Middle Level
Middle Level
Management
Management
Operational Management
��MIS,
MIS,
��Exceptions,
Exceptions,
��Whistle
Whistle
Blowers,
Blowers,
��Statutory Audit
Statutory Audit
& Internal
& Internal
Audit Remarks
Audit Remarks
��Strategies
Strategies
��Control
Control
Framework,
Framework,
��Policies &
Policies &
Procedures
Procedures
��Code of Conduct
Code of Conduct
��Action Points
Action Points
50
Deloitte Survey of Senior Executives
Deloitte Survey of Senior Executives
and Board Members: 2007
and Board Members: 2007
�M
any
bo
ard
s an
d e
xecu
tive
s ar
e st
ill i
n t
he
dar
k ab
ou
t th
e h
ealt
h o
f th
eir
bu
sin
esse
s
�N
on
-fin
anci
al f
acto
rs a
re i
mp
ort
ant
dri
vers
of
succ
ess
for
a co
mp
any,
ye
t th
ey r
ecei
ve c
on
sid
erab
ly l
ess
atte
nti
on
th
an f
inan
cial
dat
a
�F
inan
cial
met
rics
see
m m
ore
so
lid a
nd
fam
iliar
. Nat
ura
lly, t
her
eis
re
sist
ance
�C
om
pan
ies
such
as
Har
rah
’s E
nte
rtai
nm
ent,
Sta
nd
ard
Ch
arte
red
Ban
k,
Ed
con
, or
Ro
yal
Ban
k o
f C
anad
a ar
e sc
ori
ng
visi
ble
su
cces
ses
by
mo
re
clo
sely
tra
ckin
g an
d m
anag
ing
no
n-f
inan
cial
per
form
ance
met
rics
�M
any
mo
re c
om
pan
ies
are
incl
ud
ing
no
n-f
inan
cial
dat
a in
th
eir
ann
ual
re
po
rts
or
thei
r sh
areh
old
er b
rief
ings
�C
om
pen
sati
on
str
uct
ure
s co
nti
nu
e to
evo
lve
to i
ncl
ud
e n
on
-fin
anci
al
targ
ets
�Boards and management teams by their own admission see that
the information they need is not the information they are receiving
Relevance of NON FINANCIAL factors in Board Decision Making
51
Deloitte Survey of Senior Executives
Deloitte Survey of Senior Executives
and Board Members 2007
and Board Members 2007
52
Three main groups responsible for
Three main groups responsible for
Financial Reporting
Financial Reporting
��A
pro
per
an
d w
ell f
un
ctio
nin
g sy
stem
exi
sts
ther
efo
re,
A p
rop
er a
nd
wel
l fu
nct
ion
ing
syst
em e
xist
s th
eref
ore
, w
hen
th
e th
ree
mai
n g
rou
ps
resp
on
sib
le f
or
fin
anci
al
wh
en t
he
thre
e m
ain
gro
up
s re
spo
nsi
ble
fo
r fi
nan
cial
re
po
rtin
g re
po
rtin
g ––
the
the BOARD
BOARD
, th
e , t
he INTERNAL AUDITOR
INTERNAL AUDITOR
and
th
e an
d t
he OUTSIDE AUDITORS
OUTSIDE AUDITORS
––fo
rm t
he
thre
efo
rm t
he
thre
e --le
gged
le
gged
st
oo
l th
at s
up
po
rts
resp
on
sib
le f
inan
cial
dis
clo
sure
an
d
sto
ol t
hat
su
pp
ort
s re
spo
nsi
ble
fin
anci
al d
iscl
osu
re a
nd
ac
tive
an
d p
arti
cip
ato
ry o
vers
igh
t.
acti
ve a
nd
par
tici
pat
ory
ove
rsig
ht.
��T
he
aud
it c
om
mit
tee
has
an
imp
ort
ant
role
to
pla
y in
th
is
Th
e au
dit
co
mm
itte
e h
as a
n im
po
rtan
t ro
le t
o p
lay
in t
his
p
roce
ss, s
ince
th
e au
dit
co
mm
itte
e is
a s
ub
pro
cess
, sin
ce t
he
aud
it c
om
mit
tee
is a
su
b-- g
rou
p o
f th
e gr
ou
p o
f th
e fu
ll b
oar
d a
nd
hen
ce t
he
mo
nit
or
of
the
pro
cess
. fu
ll b
oar
d a
nd
hen
ce t
he
mo
nit
or
of
the
pro
cess
.
��T
he
Au
dit
Co
mm
itte
eT
he
Au
dit
Co
mm
itte
e ’’s
job
is c
lear
ly o
ne
of
ove
rsig
ht
and
s
job
is c
lear
ly o
ne
of
ove
rsig
ht
and
m
on
ito
rin
gm
on
ito
rin
g
��R
elia
nce
is p
ut
on
th
e se
nio
r fi
nan
cial
man
agem
ent,
th
e R
elia
nce
is p
ut
on
th
e se
nio
r fi
nan
cial
man
agem
ent,
th
e in
tern
al a
ud
ito
rs a
nd
th
e o
uts
ide
aud
ito
rs.
inte
rnal
au
dit
ors
an
d t
he
ou
tsid
e au
dit
ors
.
53
Risk Management
-An important aspect of Corporate
Governance
54
��P
oss
ibili
ty o
f an
ad
vers
e ev
ent
wh
ich
may
neg
ativ
ely
affe
ct t
he
Po
ssib
ility
of
an a
dve
rse
even
t w
hic
h m
ay n
egat
ivel
y af
fect
th
e ab
ility
of
an
abili
ty o
f an
org
aniz
atio
n t
o a
chie
ve it
s o
bje
ctiv
eso
rgan
izat
ion
to
ach
ieve
its
ob
ject
ives
��D
icti
on
ary
(Mir
riam
Dic
tio
nar
y (M
irri
am--
Web
ster
On
Web
ster
On
--L
ine)
L
ine)
��P
oss
ibili
ty o
f lo
ss o
r in
jury
Po
ssib
ility
of
loss
or
inju
ry
��So
me
on
e o
r so
met
hin
g th
at c
reat
es o
r su
gges
ts a
haz
ard
(i.e
. so
Som
e o
ne
or
som
eth
ing
that
cre
ates
or
sugg
ests
a h
azar
d (
i.e. s
ou
rce
of
urc
e o
f
dan
ger)
dan
ger)
��W
ork
ing
view
of
risk
Wo
rkin
g vi
ew o
f ri
sk
��T
he
imp
act
of
and
th
e lik
elih
oo
d o
f th
reat
occ
urr
ing
Th
e im
pac
t o
f an
d t
he
likel
iho
od
of
thre
at o
ccu
rrin
g
��A
ffec
tin
g th
e o
rgan
izat
ion
Aff
ecti
ng
the
org
aniz
atio
n’’ s
ab
ility
to
ach
ieve
bu
sin
ess
stra
tegi
es a
nd
s
abili
ty t
o a
chie
ve b
usi
nes
s st
rate
gies
an
d
ob
ject
ives
ob
ject
ives
What is Risk?
What is Risk?
55
What is Risk?
What is Risk? Contd..
Contd..
��R
isk
may
be
def
ined
as
Ris
k m
ay b
e d
efin
ed a
s ““
an u
nce
rtai
n f
utu
re e
ven
t an
un
cert
ain
fu
ture
eve
nt
wh
ich
co
uld
infl
uen
ce t
he
ach
ieve
men
t o
f w
hic
h c
ou
ld in
flu
ence
th
e ac
hie
vem
ent
of
org
aniz
atio
no
rgan
izat
ion
’’ s o
bje
ctiv
ess
ob
ject
ives
””
��T
ypes
of
RIS
KT
ypes
of
RIS
K��Strategic Risks : Risks of doing wrong things
Strategic Risks : Risks of doing wrong things
��Operating Risks : Doing right things in wrong way
Operating Risks : Doing right things in wrong way
��Financial Risks : Losing financial resources or
Financial Risks : Losing financial resources or
incurring unacceptable liabilities
incurring unacceptable liabilities
��Information Systems Risks : Inaccurate/Unreliable/
Information Systems Risks : Inaccurate/Unreliable/
Misleading Information
Misleading Information
��Reporting and Compliance Risks : Unreliable
Reporting and Compliance Risks : Unreliable
reporting and non
reporting and non-- compliance with laws and
compliance with laws and
regulations
regulations
56
Categories of Risks
Categories of Risks
What kinds of risk can take your business
down?
Ris
k F
ocu
s ca
tegorize
s al
l busines
s risk
s in
to n
ine
area
s:Ris
k F
ocu
s ca
tegorize
s al
l busines
s risk
s in
to n
ine
area
s:
1.1.Asset management risks
Asset management risks
––pro
per
ty loss
, dam
age,
pro
per
ty loss
, dam
age,
des
truct
ion, or lo
ss o
f use
(to
you o
r an
oth
er p
arty
) of
des
truct
ion, or lo
ss o
f use
(to
you o
r an
oth
er p
arty
) of
buildin
gs, p
lants, eq
uip
men
t, sto
ck, et
c.buildin
gs, p
lants, eq
uip
men
t, sto
ck, et
c.
2.2.Compliance risk
Compliance risk
––lo
sses
ste
mm
ing fro
m inad
equat
e lo
sses
ste
mm
ing fro
m inad
equat
e co
mplian
ce syst
ems
com
plian
ce syst
ems
3.3.General management risk
General management risk ––
impac
t of poor
impac
t of poor
man
agem
ent pra
ctic
esm
anag
emen
t pra
ctic
es
57
Categories O
f Risks
Categories O
f Risks
Contd
..Contd
..
What kinds of risk can take your business down?
What kinds of risk can take your business down?
(contd.)
(contd.)
4.
People risk–
inju
ry to e
mplo
yee
s or oth
er p
arties
; fa
ilure
of duties
of
care
to o
ther
par
ties
5.
Environmental risk
–dam
age
to the
environm
ent, b
oth
direc
t an
d
indirec
t
6.
Change managem
ent risk
–im
pac
t on b
usines
s bec
ause
of poorly
man
aged
chan
ge
pro
cess
es
7.
Financial risk
–re
duce
d rev
enues
and/o
r in
crea
sed e
xpen
se flo
ws
8.
Product/service risk –
liab
ility a
rising fro
m a
pro
duct
or se
rvic
e,
incl
udin
g q
ual
ity a
nd d
eliv
ery
9.
Technology risk
–neg
ativ
e im
pac
t on the
busines
s bec
ause
of fa
ilure
s of te
chnolo
gy
58
New Zealand Standards on Risk
New Zealand Standards on Risk
Management
Management
59
Risks without control and
Risks without control and
mitigation is disaster
mitigation is disaster……
60
Acceptable Control Framework is
Acceptable Control Framework is
COSO
COSO
��In
tern
al c
on
tro
l is
co
mp
rise
d o
f:
Inte
rnal
co
ntr
ol
is c
om
pri
sed
of:
��C
on
tro
l En
viro
nm
ent
Co
ntr
ol E
nvi
ron
men
t
��R
isk
Ass
essm
ent
Sys
tem
Ris
k A
sses
smen
t S
yste
m
��C
on
tro
l Act
ivit
ies
Co
ntr
ol A
ctiv
itie
s
��In
form
atio
n &
Co
mm
un
icat
ion
sys
tem
Info
rmat
ion
& C
om
mu
nic
atio
n s
yste
m
��M
on
ito
rin
g sy
stem
Mo
nit
ori
ng
syst
em
61
�Internal Audits
�Messages from Senior Management
�Policies and Procedures
�Code of Ethics
The process which ensures that
relevant information is identified
and communicated in a timely
manner
The policies and procedures
that help ensure that actions
identified to manage risk are
executed and timely
The control conscience of
an organization. The
“tone at the top”
The evaluation of internal
and external factors that
impact an organization’s
performance
�Business Risk Management
�Process Risk Management
�Internal Audit Risk Assessment
�Disclosure Committee
�Delegation of Authority
�Approvals
�Common Processes and Systems
�Segregation of Duties
�Account Reconciliations
�Information Technology Controls
�Code of Ethics
�Documented Policies and Procedures
�Cultural Assessment
�Training
�Management Analysis
The process to determine
whether internal control is
adequately designed, executed
effective and adaptive
COSO Framework
COSO Framework
62
Role of Internal Audit
Role of Internal Audit
in Risk Management
in Risk Management
63
Definition of Internal Auditing
Definition of Internal Auditing
As
per
In
stit
ute
of
Inte
rnal
Au
dit
ors
(II
A),
US
A:
As
per
In
stit
ute
of
Inte
rnal
Au
dit
ors
(II
A),
US
A:
-- ““an
ind
epen
den
t, o
bje
ctiv
e an
ind
epen
den
t, o
bje
ctiv
e assurance and consulting
assurance and consulting
activity
activity
--d
esig
ned
to
d
esig
ned
to
add value
add value
and
imp
rove
an
org
anis
atio
nan
d im
pro
ve a
n o
rgan
isat
ion
’’ s s
op
erat
ion
s.
op
erat
ion
s.
-- It
hel
ps
an o
rgan
isat
ion
acc
om
plis
h it
s o
bje
ctiv
es b
y It
hel
ps
an o
rgan
isat
ion
acc
om
plis
h it
s o
bje
ctiv
es b
y b
rin
gin
g a
syst
emat
ic, d
isci
plin
ed a
pp
roac
h t
o e
valu
ate
and
b
rin
gin
g a
syst
emat
ic, d
isci
plin
ed a
pp
roac
h t
o e
valu
ate
and
im
pro
ve t
he
effe
ctiv
enes
s o
f im
pro
ve t
he
effe
ctiv
enes
s o
f risk management, control
risk management, control
and governance process
and governance process
.. ””
64
Objectives of Internal Audit
Objectives of Internal Audit……
Po
licie
s
Bo
ard
Man
agem
ent
Inte
rnal
Au
dit
Effectiveness /
Efficiency
Good Governance
‘Met
ho
ds
use
d t
o m
anag
e an
d c
on
tro
l th
e b
usi
nes
s to
ac
hie
ve it
s go
als
and
o
bje
ctiv
es’
Safeguard
Assets
Reliable
Information
Legislative
Compliance
Maximizing Value
and
Managing
Risks
Ind
epen
den
t A
pp
rais
er /
Ad
vise
rAchieving
Business
Objectives
‘Controls’
Sys
tem
sP
roce
du
res
65
��2010.A1
2010.A1
––T
he
inte
rnal
au
dit
act
ivit
yT
he
inte
rnal
au
dit
act
ivit
y ’’s
pla
n o
f en
gage
men
ts
s p
lan
of
enga
gem
ents
sho
uld
be
bas
ed o
n a
sh
ou
ld b
e b
ased
on
a risk assessment, undertaken at
risk assessment, undertaken at
least annually
least annually
..
��2120.A1
2120.A1
––B
ased
on
th
e re
sult
s o
f th
e ri
sk a
sses
smen
t, t
he
Bas
ed o
n t
he
resu
lts
of
the
risk
ass
essm
ent,
th
e
inte
rnal
au
dit
act
ivit
y sh
ou
ld
inte
rnal
au
dit
act
ivit
y sh
ou
ld evaluate the adequacy and
evaluate the adequacy and
effectiveness of controls encompassing the
effectiveness of controls encompassing the
organization
organization’’ s governance, operations, and
s governance, operations, and
information systems
information systems ..
��2210.A1
2210.A1
––W
hen
pla
nn
ing
the
enga
gem
ent,
th
e in
tern
al
Wh
en p
lan
nin
g th
e en
gage
men
t, t
he
inte
rnal
aud
ito
r sh
ou
ld
aud
ito
r sh
ou
ld identify and assess risks relevant to
identify and assess risks relevant to
the activity under review
the activity under review
. T
he
enga
gem
ent
ob
ject
ives
.
Th
e en
gage
men
t o
bje
ctiv
es
sho
uld
ref
lect
th
e re
sult
s o
f th
e ri
sk a
sses
smen
t.sh
ou
ld r
efle
ct t
he
resu
lts
of
the
risk
ass
essm
ent.
Risk vis
Risk vis-- àà-- vis IIA Standards
vis IIA Standards
66
Deloitte Infrastructure for
Deloitte Infrastructure for
Corporate Governance
Corporate Governance
67
https://www.corpgov.deloitte.com
https://www.corpgov.deloitte.com
68
Corporate Governance Tools:
Corporate Governance Tools:
69
Relevant Web sites:
Relevant Web sites:
70
GOOD LUCK
FOR THE NEW JOURNEY
TO ADD VALUE
Mr. Hemant M. Joshi, Partner, Deloitte Haskins & Sells, Pune
Mr. Hemant M. Joshi, Partner, Deloitte Haskins & Sells, Pune
EE-- mail id:
mail id: [email protected]
Phone No.: 91
Phone No.: 91 --2020-- 66244600
66244600
