Reporting on IFC by Statutory Auditor has become mandatory, effective from FY 2015-16. For non compliance of IFC requirement, the company shall be punishable with fine which shall not be less than fifty thousand rupees, but which may extend to twenty-five lakh 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 or with fine which shall not be less than fifty thousand rupees, but which may extend to five lakh rupees or with both.
We at Soatech have a focused team, working on the IFC requirement who have got experience in Big 4 consulting firms.
We help in implementing effective IFC in company, our delivery methodology will be
- Understand Company structure and other entities
- Map all the classes of transaction in annual reports to the ICFR framework
- Items will be broadly mapped to the following business process and different sub process within them:
- Order to Cash
- Purchase to Pay
- Fixed Assets Cycle
- Hire to Retire, Payroll
- Record to Report (FCRP, Investments, Treasury, Taxation, Statutory compliance)
- Entity Level cycle for identifying controls that affect at entity level
Meaning of IFC of the Companies Act, 2013
Internal financial controls means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
Independent Directors shall satisfy themselves on the integrity of financial information and that of financial controls. [As per Schedule IV(II)(4) of the Companies Act)
The report by the Board of Directors (BoD) shall include a statement ensuring implementation of adequate internal financial control and adherence of policy and procedures adopted by the company with an objective of orderly and efficient conduct of its business, safeguarding company’s assets, prevention and detection of frauds, for accuracy and completeness of the accounting records and timely preparation of reliable financial information. [As per Clause 134(5)(e)]
Auditor’s report should state the adequacy and operating efficiency of the Company’s internal financial controls.