June 11, 2017
When it comes to internal financial controls, a majority of companies are going beyond just ticking the right boxes to comply with the rules.
They are actually deriving business value through compliance, says a survey.
Conducted by leading consultancy Deloitte, the survey also found that majority of the board or audit committees actively participate in the internal financial controls programme.
Over 73 per cent firms surveyed have tried to go beyond just ticking the right boxes but also focused on deriving business value and enhancing operating efficiency while ensuring compliance, said the Deloitte India Internal Financial Controls report.
"The governing stakeholders seem to have also taken on the role in true spirit as anticipated by the (Companies) Act with 60 per cent board or audit committees actively participating in the internal financial controls programme through detailed discussions and meetings," it said.
The findings are based on a survey of around 65 CFOs (Chief Financial Officers) conducted last month.
Around 74 per cent of the respondents indicated that the process owners periodically discussed issues, weaknesses and progress of the company's internal financial controls programme.
Under the Companies Act, 2013, companies are required to have strict internal financial controls. Among others, auditors are required to provide information about a company's internal financial controls and their operating effectiveness in the annual statements.
"Internal financial controls provide a structured approach to strengthen the quality of the control systems, efficiency and timeliness of financial reporting, as well as the ability to prevent and detect errors and irregularities from occurring," Toyota Kirloskar Motor Vice Chairman Shekar Viswanathan was quoted as saying in the report.
Deloitte India Partner Sachin Paranjape said the survey results, however, show that companies have gone above and beyond the call of compliance to derive greater meaning and value from their internal financial controls initiative.
[Daily News & Analysis]