The document discusses the requirements for internal financial controls (IFC) under the Companies Act 2013. It defines IFC and outlines the requirements for directors, statutory auditors, and audit committees to evaluate and report on IFC. It then describes AKMK & Associates' approach to assessing IFC which includes identifying key business processes, documenting controls, testing control design and effectiveness, and remediating any deficiencies found.

1. AKMK & Associates
Chartered Accountants
Synopsis
Design & Assessment of
Internal Financial Controls

2. Requirement on Internal Financial Controls (IFC)
as per Companies Act 2013
Definition of IFC: “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”
Requirement:
 As per Section 134(5)(e) requires, directors to make an assertion in Directors
Responsibility Statement that they have laid down internal financial controls to be
followed and that such IFCs are adequate and operating effectively
 Under Section 143(3)(i), Statutory Auditors are required to make a statement in
their Auditors Report, whether the company has adequate IFC system in place and
the operating effectiveness of such controls
 Under Section 177(4)(vii), the duties of the Audit Committee include evaluation of
internal financial controls & to make a report to the board
 The roles and functions codified in Schedule IV of The Companies Act 2013 clearly
state that independent directors shall satisfy themselves on the integrity of financial
information and that financial controls and the systems of risk management are
robust and defensible AKMK & Associates
Chartered Accountants2
Applicable from FY 2015-16

3. IFC Approach - Scoping
Business Processes & Business Locations:
Key business transactions/ key accounts of following process cycles &
locations identified using aforementioned scoping methodology:
AKMK & Associates
Chartered Accountants3
Procure to
Payment
Order to
Collections
Fixed Assets
Financial Statement
Reporting (includes
Financial Statements
Closing Process,
Consolidation /
Disclosure process, Key
Inter Unit transactions)
Treasury
Management
Hire to payroll
Inventory
management
IT General
Controls
For Major Locations of
Company

4. IFC Methodology
AKMK & Associates
Chartered Accountants4
• Documentation of controls in Risk Control Matrices (RCM’s) through interview /discussion with the
process owners: Control objectives and business risks are identified, existing controls are
discussed with process owners are documented. Process gaps are identified and communicated
to process owners to remediate the gaps.
• Test of Control Design (TOD): Walkthrough/testing is conducted for identified controls on sample
basis for each significant class of transaction based on the test control deficiencies are
communicated to process owners to remediate gaps.
• Sign off and agreement of control deficiencies: Control deficiencies and process gaps are agreed
with the management and management action plans are taken to remediate the gaps along with
TOD gaps. Sign off is taken on the RCM’s/ Control deficiencies and action plan agreed by the
management.
• Test of control effectiveness (TOE): On sample basis, Test of control effectiveness is scheduled to
be carried out with an objective to confirm that the documented controls were operating effective
through-out the review period i.e. FY2015-16.
• Re-TOD and Re-TOE: After remediation of controls, the evidences for the sample transactions is
selected from the period post remediation date for testing. New controls are drafted based on
review of evidences provided in the final RCM’s

5. Welcome to AKMK
Welcome at AKMK & Associates.
 At the outset, AKMK & Associates would like to thank you for having
evinced interest in our organization. AKMK is a full-fledged young and
energetic professionals group based on the values of quality, commitment
and value addition to clients.
 We believe in solutions which add to growth of our clients & hence our
relationship goes like, let’s associate, let’s grow. Clients’ growth is passion
for us and hence we are selective for our clientele & once associated, we
dedicate ourselves completely to accelerate the growth of client’s
organization.
 We are a team (20+ members) of energetic, enthusiastic and acumen
professionals and uniquely positioned to provide a premium service to
clients which can be a great source of value addition to business with each
team member having specific expertise.
AKMK & Associates
Chartered Accountants5

6.  Having expertise as Risk and Controls Consultant, Consulting CFO.
 A gold medalist rank holder at graduation level and qualified as Chartered
Accountant
 More than 11 years of industrial experience in big giants like Reliance
Industries, Suzlon Energy and Sunflag Steel, HSBC Bank, Garware Group,
Cadbury India, Inarco, Albright & Wilson, United Breweries etc in
Internal Audit & Management Reporting.
Relevant Internal Controls & Risk Management Experience-
 Reliance Industries Ltd (from 3rd Oct 2006 to 13th Feb 2010)
Responsible as an Assignment Manager in Management Audit Function
for review of entire Refinery Operations & Project Functions.
 Sunflag Iron & Steel Co Ltd (from 13th Feb 2010 to 28th Feb 2012)
Responsible for complete Internal Audit Function.
 Suzlon Energy Ltd (from 3rd Mar 2012 to 13th Mar 2013)
Responsible as an Assignment Manager in Management Assurance.
 Presently heading Advisory Division and rendering services as Consulting
CFO, Risk and Controls Consultant.
AKMK & Associates
Chartered Accountants
About Manish Kagathara Partner (Advisory)
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7.  A team of energetic, enthusiastic and acumen professionals
 Manish Kagathara (Partner) already had the corporate internal audit
experience of heading Internal Audit Function of Sunflag & other large &
complex organizations including Reliance & Suzlon for ten years.
Significant value additions to organisations with respect to:
 Adequacy, appropriateness & effectiveness of the internal controls
 Effective risk management framework
 systems, procedures,
 cost control measures.
 Dream Team headed by Manish Kagathara to be deployed at the
company with expertise in various areas having edge in internal audit.
Personal Presence of Manish Kagathara will ensure required quality in
audit.
AKMK & Associates
Chartered Accountants
Value Proposition
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8.  Selective clients with focused approach on each client to ensure high
quality deliverables within targeted time frame.
 High integrity of the entire team to ensure 100% compliance to ethical
standards by ICAI. To ensure confidentiality of information.
 Combined team experience of more than 25 years in internal audit.
 Comprehensive knowledge of business processes and SAP system
provides us the required distinctive edge.
AKMK & Associates
Chartered Accountants
Value Proposition
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9. We look forward to associate with your organization. In case if you want
more clarity on any aspects, we would be very happy to discuss or have
pleasure meet with you.
Present office locations at Surat, Navsari & Kamrej.
Planning to set up offices at Mumbai, Hubli & Nagpur.
CA Manish Kagathara – 99989 68927,
ca.manishkagathara@gmail.com
CA Ravi Santoki – 94281 46821,
santoki_ravi@yahoo.co.in
CAAnil Kagathara – 94088 52588,
ca.anilkagathara@gmail.com
AKMK & Associates
Chartered Accountants
Connect to us
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10. THANKS YOU SO MUCH
FOR YOUR VALUEABLE TIME
AKMK & Associates
Chartered Accountants