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Wirc Ifc PDF
Wirc Ifc PDF
Wirc Ifc PDF
10
Directors
Responsibility
Statement
Section
143
Auditor Report
The auditors report should also state whether the company has adequate
IFC system in place and the operating effectiveness of such controls
Section
177
Audit Committee
Sch IV
Independent
Directors
Page 3
1 Directors Responsibility
Statement (134)
IFC
ICFR
3 Audit Committee (177)
ICFR
4 Independent Directors
(Schedule IV)
ICFR
Public Listed
Pvt Cos pd up
share capital >=
INR 20 Cr
Public un-listed
Paid-up share
capital>= INR 10
Cr
Loans,
Borrowing in
aggregate >=
INR 50 Cr
Operational
controls
Fraud prevention
IFC
Example
Sales realization is
correctly recorded in
the Financials
Discount on sale is
offered as per DOA and
adherence to DOA is
monitored
Unauthorised change
in price master
(access controls)
Definition
As per Section 134 of the Companies Act 2013, the 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 companys 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.
Page 5
Authorizations of
transactions
(in accordance
with GAAP)
Safeguarding of
the assets of the
company
ICFR
Definition
A process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal financial control over financial reporting includes those policies and procedures :
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorisations of management and directors of the
company; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Page 6
UK
USA
Scope
ICFR + Policies/Procedures
+ Fraud + Safeguarding
Assets
Framework
Components of Internal
Controls as per SA 315
COSO
The UK Corporate
Governance Code
Guidance
AS-6
UK Combined
Code/Turnbull guidance
Control
assessment
Yes
Yes
Auditor attestation
Yes ICFR
Yes ICFR
Yes
Rigour of
implementation
High
High
Page 7
IFC (including
operational &
Compliance)
Controls documentation
Page 8
Scoping
Design
assessment
Design Gap
remediation
One
time
Detailed scope
Validate &
document
design
Corrective
action
Prepare test
strategy & plan
Reporting
approach
Ongoing
Overall
assessment
and
reporting
Operating
effectiveness
(OE)
Update for
changes
Seek
confirmation on
changes
Test controls
Report
Page 10
Scoping
Design assessment
Gap remediation
Operating
effectiveness
Assessment and
reporting
Scoping
Design assessment
Gap remediation
Operating
effectiveness
Assessment and
reporting
2. Risk Assessment
3. Control Activities
4. Information &
Communication
5. Monitoring
Page 12
Scoping
Design assessment
Gap remediation
Operating
effectiveness
Assessment and
reporting
Perform Walkthroughs
Document Process Flows
Entity/ Transaction level
GITC
Segregation of Duties
IT System overview Diagram
IPE documentation
Controls Benchmarking
Scoping
Design assessment
Gap remediation
Operating
effectiveness
Assessment and
reporting
Page 14
Material weakness
Test of Design (TOD)
Remediation plans
Scoping
Design
assessment
Gap remediation
Operating
effectiveness
Testing
Assessment and
reporting
Page 15
Sampling methodology
JE CAATs
Linkage with ELCs
Timing of testing
Extending sample size
Analysis of error in the sample Tolerable error etc
Scoping
Design
assessment
Gap remediation
Operating
effectiveness
Assessment and
reporting
Page 16
Opinion on IFC
Material weakness