Internal Financial Controls

Board’s Agenda

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The necessity for strong internal controls within an organization has evolved from being merely a best practice to a legal requirement. For entities operating in the United States or with subsidiaries abroad, the Sarbanes-Oxley Act of 2002 (SOX) marked a pivotal moment, mandating the reporting and certification of internal controls by both management and auditors.

Similarly, in the Indian context, the Companies Act of 2013 has established the Reporting on Internal Financial Controls (IFC) as a comparable legislative framework, underscoring the imperative for robust internal controls in corporate governance.

Internal control effectiveness

Investors, management, and stakeholders worldwide are striving for enhanced standards in internal controls, risk management programs, and communication. Ambit Collective LLP’s internal controls effectiveness review is adept at revealing inadequately designed controls and offering recommendations for improvement.

What Ambit Collective can do for you

In the current business landscape, companies require a robust internal control framework offering:

  • A sturdy base for facilitating expansion
  • Enhancements in operational and reporting efficiency and effectiveness
  • Safeguarding company assets
  • Protection against fraudulent activities
  • Adherence to laws and regulations

Enterprises equipped with strong internal controls are often better equipped to detect and address risks that might hinder the achievement of their business objectives.

Ambit Collective LLP’s Internal Financial Controls (IFC) service is designed to evaluate financial statement controls and select operational controls across five pivotal processes: order-to-cash, purchase-to-pay, payroll, inventory, and property, and plant and equipment. Through the IFC service, a comprehensive assessment is provided, encompassing:

  • Identification of poorly designed existing controls
  • Identification of gaps in the existing control framework
  • Recommendations for enhancing current controls

This insightful analysis equips your business with a deep understanding to enhance the efficiency and effectiveness of your internal controls, meeting the evolving demands of stakeholders. With the ICE assessment, you can build the desired confidence in your internal controls.

The best way to start

Ask yourself some key questions:

  • Are you sure of the effectiveness of the design of your controls?
  • Are they tailored to suit your business needs both presently and in the future?
  • Do you have the assurance that your internal controls can effectively prevent and detect financial statement errors and fraudulent activities?
  • Most importantly, is your control environment primed to support your company’s expansion?

Ambit Collective LLP’s IFC teams assist clients to manage the complexity of identifying and documenting the IT controls including periodic testing and reporting on the same under the SOX and IFC regulations respectively, as may be applicable. Typical scope of work includes the following:

 

  • Risk Assessment and Scoping.
  • Documentation of internal controls including gap assessment.
  • Testing of internal controls to assess operating effectiveness.
  • Controls rationalization to optimize controls and reduce costs and efforts