LP-IFC


Internal Financial Controls System : 

The 2013 Companies Act marks a major step forward in raising the bar on corporate governance in India as it appreciates the current economic environment and in which companies operate. The Act has re-emphasized the importance of a robust internal financial control environment by casting specific responsibility on the board, audit committee, management as well as auditors – aiming to strengthen all the 3 lines of defense.

As part of the IFC implementation companies are required to do the following:

  • Define governance tone at the top
    • Define entity and process level policies, develop a delegation of authority
  • Identify key and non-key controls
    • Perform an assessment of Entity Level controls, Process Level Controls, IT Controls and Anti Fraud controls
  • Document all existing finance and operating controls
    • Develop a robust financial close process and document controls around the process
    • Document controls in the form of RCMs
    • Define and document user responsibilities
  • Monitor effectiveness of existing controls
    • Undertake an assessment on design of controls
    • Perform periodic assessments through audits to review the effectiveness of the controls
  • Prevent and detect frauds
    • Identify fraud risks and existing controls in the processes to mitigate these risks
    • Define mitigating controls for any gaps identified
  • Integrate technology support

Features

The LP-IFC framework is customized to the needs of the organization and is deployed in a transparent and streamlined process by:

  • Enabling documentation of controls – Risk Control Matrix (RCM)
  • Defining the Controls’ calendar for every control owner to check operating effectiveness of control
  • Defines the Escalation Matrix for every control
  • Facilitating recording of the evaluation of design effectiveness of the control environment – ideally at least one a year
  • Facilitating recording of the evaluation of operating effectiveness of the control environment as per the frequency defined
  • Enabling IFC reporting to the Board and Auditors using dashboards

The system can integrate with SAP or any other ERP for the underlying data requirement for testing of design and operating effectiveness.


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