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The Companies Act, 2013 (the “2013 Act”) has imposed specific responsibilities on the Board of Directors (“Board”) towards the company’s internal financial controls and, inter alia, requires the Board 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. These changes are effective from the financial years beginning on or after 1 April, 2014.
Currently, many companies are assessing the impact these new requirements will have on the operations and processes of the company, including the financial reporting process. Internal financial controls include policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including regulatory compliance and prevention and detection of frauds and errors, thereby covering not only the controls over reliable reporting of financial statements (more commonly known as Internal Financial Controls over Financial Reporting (“IFCFR”), but also include all other controls pervasive across the business.
Statutory auditors are required to report on the adequacy and operating effectiveness of the company’s IFCFR.
The process of complying with the annual assertion under the 2013 Act requires effective planning, knowledgeable resources, and excellent coordination and communication. The requirements for a successful implementation includes understanding the complexities of the business, perform against tightly controlled timelines, and stay alert for opportunities to improve effectiveness and /or efficiencies.
Soni Chatrath’s internal controls specialists have provided internal financial controls and Internal Controls over Financial Reporting (ICFR) related services for leading companies. Our internal control specialists have experience as auditors of Sarbanes Oxley compliance programs — we understand what auditors expectations are for such programs. We also have considerable experience as controls testing providers and are well versed in internal financial control related requirements, tools and technologies.