1 | Copyright © 2014 Indiba Consultancy Services Limited

Internal Financial Control (IFC): Assessment & Compliance Implementation

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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

Operational

Controls

Internal Financial controls Over financial

reporting (ICFR)

IFC

Purchase liability

(AP) is

correctly 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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What is Internal Financial Control (IFC) ? Cont...

• Section 134 of Companies Act 2013 Mandates the Board of Directors to state that they

have laid down internal financial controls to be followed by the company and

• That such internal financial controls are adequate and were operating effectively.

• The Companies Act, 2013 imposed specific responsibilities on the Board of Directors and

if the company contravenes the provisions of this section:

• The company shall be punishable with fine which may extend to 25 lacs rupees

and

• Every officer of the company who is in default shall be punishable with imprisonment

for a term which may extend to three years.

• The reporting by the auditors is voluntary for the year ending 31 March 2015 and

mandatory for financial years beginning on or after 1 April, 2015.

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Who All Are Responsible? As per Companies Act 2013

Who All are Responsible

Public

Listed

Compan

y

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 the

framework 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-engineering 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 (like SAP )

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 &

Communicate

Plan & Scope Document, Assess &

Remediate

Sustain & 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 &

Reporting

Internal Control

Framework

Development

Phase 1 Phase 2 Phase 3 Phase 4

Project

People

Proces

s

Internal financial controls (IFC) - implementation methodology

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IFC - Tools and Accelerators ( Developed by Indiba Consulting)

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Indiba Consultancy Offering on IFC

1. At Indiba Consulting we have in depth industry and internal financial controls

assessment, Testing and Compliance expertise.

2. We have developed the IFC accelerating tools for faster and effective

Implementation in specified time frame.

3. Indiba Consulting IFC specialists have provided internal financial controls (IFC)

and Internal Controls over Financial Reporting (ICFR) related services to many

leading companies.

I look forward to being of assistance to you.

If you need help with how go for IFC Compliance

kindly contact us on: +91 9987454045 or info@indiba.in

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• Strategic Thinker & Business advisor, interest in client Business Models and

methods of execution with a view of creating organizational Culture that is

focused on generating growth and value through Change.

• Professionally qualified Chartered, cost & Management accountant with Ph.D. in

business Management.

• Previously worked as:

Global CFO – SuperMax Group (150 country)

Group CFO – Al Khodari group (Africa & Middle east)

Director Finance & Business planning – PEPSI (GCC)

Head of Finance (Shared Service) – UNILEVER

Finance Manager – MOTOROLA

• A seasoned professional specialized in generating shareholders’ value through

turnaround, reengineering, restructuring, M&A, Legal and tax compliances,

Business system and ERP implementation & Optimization.

• Development of international business & joint ventures. Leading the companies

for getting Investors Funding, PE/VE, IPO and listing them on stock exchange.

• 25+ years of hands-on experience in managing & Leading the business &

finance function at global level heading more than 150 countries.

Dr. Dhirendra GautamDr. Dhirendra Gautam (Ph.D. , CA, CMA, ICWA)

Indiba Consultancy - CEO

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Thank You

Contact us : www.indba.in Mumbai Office : Office No – 203, 2nd Floor, Chawala Complex, CBD Belapur, Sector 15, Navi Mumbai – 400614. UAE : 2204,Fortune Executive Towers T-1, JLT, Dubai United Arab Emirates Cell : +91 9987454045 / 9028013279 Telephone : +91 22 65206530 Email : info@indiba.in