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Accounting &
Evaluation Services
Risk
Management
Transaction
Advisory
Outsourcing &
Business Support
Global Accounting
& Compliance
Training and
Workshops
Resources
Internal Financial Control for Reliable Reporting and Risk Prevention
What Is Internal Financial Control (IFC)?
Defined under Section 134(5)(e) of the Companies Act, 2013, Internal Financial Controls refer to the internal policies and procedures adopted by a company for:
Ensuring orderly and efficient conduct of its business,
Safeguarding assets,
Preventing and detecting fraud and errors,
Ensuring accuracy and completeness of accounting records, and
Timely preparation of reliable financial statements.
Unlike statutory audits, IFC focuses on both financial and operational control environments, making it integral to a company's long-term compliance and risk reduction strategy.
Components of the IFC Framework
Component | Details |
|---|---|
Control Environment | Foundation for all other controls; includes governance structure, ethical values, and roles. |
Risk Assessment | Identification and analysis of risks that could hinder achievement of business objectives. |
Control Activities | Policies and procedures that ensure management directives are carried out effectively. |
Information & Communication | Systems that support the identification, processing, and dissemination of relevant information. |
Monitoring Activities | Ongoing evaluations of control performance to address deficiencies. |
IFC Applicability Under the Companies Act, 2013
Company Type | IFC Applicability |
|---|---|
Listed Companies | Mandatory; Board must affirm adequacy and effectiveness of IFC in the Director’s Report. |
Unlisted Public Companies | Applicable if: Turnover > ₹200 Cr, Borrowings > ₹100 Cr, Share Capital > ₹50 Cr, Deposits > ₹25 Cr |
Private Companies | Applicable if: Turnover > ₹200 Cr or Borrowings > ₹100 Cr |
Audit Committees, Board of Directors, and Independent Directors play key roles in assessing and affirming the implementation and performance of IFC.
IFC Implementation Roadmap
Business Process Mapping
Identify and document key financial and operational processes (e.g., Procure-to-Pay, Order-to-Cash, Record-to-Report).
Risk & Control Identification
Perform a risk assessment to identify control gaps and high-risk areas.Control Design & Documentation
Establish control activities to address identified risks and document them in a control matrix.Testing & Evaluation
Test the design and operating effectiveness of controls periodically.Remediation & Reporting
Address control gaps and generate periodic compliance reports for management and audit committees.Ongoing Monitoring
Use control dashboards, exception reports, and internal audits to track performance and deviations.
Examples of IFC Controls
Area | Control Example |
|---|---|
Procurement | Purchase orders above a certain threshold require dual authorization. |
Payroll | Independent reconciliation of payroll reports to time and attendance records. |
Revenue | System validation of invoice generation against sales orders. |
Fixed Assets | Periodic physical verification of assets and reconciliation with asset register. |
Compliance | Checklists to ensure timely submission of statutory returns (e.g., GST, TDS, ROC). |
Legal and Regulatory References
Regulation | Requirement | Applicable To |
|---|---|---|
Section 134(5)(e) | Directors must confirm IFC adequacy and effectiveness | Listed companies |
Section 143(3)(i) | Auditor must report on IFC implementation and effectiveness | All companies |
Section 177 | Audit Committee must evaluate IFC and risk management systems | Companies with Audit Committees |
Rule 8(5), Companies (Accounts) Rules, 2014 | Board must report on IFC adequacy with respect to financial statements | All companies |
Benefits of Effective IFC Implementation
Reduced Financial Misstatements
Proactive controls prevent errors or misstatements in financial reporting.
Fraud Prevention
Helps deter or detect frauds through segregation of duties and audit trails.Operational Efficiency
Standardized processes reduce delays and improve productivity.Regulatory Compliance
Ensures the company meets legal expectations and avoids penalties.Enhanced Stakeholder Confidence
Transparent governance strengthens investor, auditor, and regulator trust.
Challenges in IFC Deployment
Challenge | Resolution |
|---|---|
Undefined Process Ownership | Clarify roles and responsibilities through documented process ownership. |
Manual Dependency | Integrate automation and system-based workflows where feasible. |
Documentation Gaps | Maintain detailed SOPs, risk-control matrices, and audit trails. |
Lack of Awareness | Conduct regular training and awareness sessions for operational teams. |
Why IFC Matters in Today’s Business Landscape
Promotes a culture of compliance and accountability
Prepares organizations for external audits and due diligence
Reduces exposure to regulatory and reputational risks
Enhances the credibility of financial reporting in both domestic and global contexts
Need help? Book a call to understand our full range of service offerings
Book A Call
Internal Financial Control (IFC) is a critical component of corporate governance and risk management. It encompasses a set of structured policies, systems, and procedures adopted by companies to ensure the integrity of financial reporting, operational effectiveness, compliance with laws, and safeguarding of assets.
Internal Financial Control for Reliable Reporting and Risk Prevention
Book A Call
Internal Financial Control (IFC) is a critical component of corporate governance and risk management. It encompasses a set of structured policies, systems, and procedures adopted by companies to ensure the integrity of financial reporting, operational effectiveness, compliance with laws, and safeguarding of assets.
What Is Internal Financial Control (IFC)?
Defined under Section 134(5)(e) of the Companies Act, 2013, Internal Financial Controls refer to the internal policies and procedures adopted by a company for:
Ensuring orderly and efficient conduct of its business,
Safeguarding assets,
Preventing and detecting fraud and errors,
Ensuring accuracy and completeness of accounting records, and
Timely preparation of reliable financial statements.
Unlike statutory audits, IFC focuses on both financial and operational control environments, making it integral to a company's long-term compliance and risk reduction strategy.
Components of the IFC Framework
Component | Details |
|---|---|
Control Environment | Foundation for all other controls; includes governance structure, ethical values, and roles. |
Risk Assessment | Identification and analysis of risks that could hinder achievement of business objectives. |
Control Activities | Policies and procedures that ensure management directives are carried out effectively. |
Information & Communication | Systems that support the identification, processing, and dissemination of relevant information. |
Monitoring Activities | Ongoing evaluations of control performance to address deficiencies. |
IFC Applicability Under the Companies Act, 2013
Company Type | IFC Applicability |
|---|---|
Listed Companies | Mandatory; Board must affirm adequacy and effectiveness of IFC in the Director’s Report. |
Unlisted Public Companies | Applicable if: Turnover > ₹200 Cr, Borrowings > ₹100 Cr, Share Capital > ₹50 Cr, Deposits > ₹25 Cr |
Private Companies | Applicable if: Turnover > ₹200 Cr or Borrowings > ₹100 Cr |
Audit Committees, Board of Directors, and Independent Directors play key roles in assessing and affirming the implementation and performance of IFC.
IFC Implementation Roadmap
Business Process Mapping
Identify and document key financial and operational processes (e.g., Procure-to-Pay, Order-to-Cash, Record-to-Report).
Risk & Control Identification
Perform a risk assessment to identify control gaps and high-risk areas.Control Design & Documentation
Establish control activities to address identified risks and document them in a control matrix.Testing & Evaluation
Test the design and operating effectiveness of controls periodically.Remediation & Reporting
Address control gaps and generate periodic compliance reports for management and audit committees.Ongoing Monitoring
Use control dashboards, exception reports, and internal audits to track performance and deviations.
Examples of IFC Controls
Area | Control Example |
|---|---|
Procurement | Purchase orders above a certain threshold require dual authorization. |
Payroll | Independent reconciliation of payroll reports to time and attendance records. |
Revenue | System validation of invoice generation against sales orders. |
Fixed Assets | Periodic physical verification of assets and reconciliation with asset register. |
Compliance | Checklists to ensure timely submission of statutory returns (e.g., GST, TDS, ROC). |
Legal and Regulatory References
Regulation | Requirement | Applicable To |
|---|---|---|
Section 134(5)(e) | Directors must confirm IFC adequacy and effectiveness | Listed companies |
Section 143(3)(i) | Auditor must report on IFC implementation and effectiveness | All companies |
Section 177 | Audit Committee must evaluate IFC and risk management systems | Companies with Audit Committees |
Rule 8(5), Companies (Accounts) Rules, 2014 | Board must report on IFC adequacy with respect to financial statements | All companies |
Benefits of Effective IFC Implementation
Reduced Financial Misstatements
Proactive controls prevent errors or misstatements in financial reporting.
Fraud Prevention
Helps deter or detect frauds through segregation of duties and audit trails.Operational Efficiency
Standardized processes reduce delays and improve productivity.Regulatory Compliance
Ensures the company meets legal expectations and avoids penalties.Enhanced Stakeholder Confidence
Transparent governance strengthens investor, auditor, and regulator trust.
Challenges in IFC Deployment
Challenge | Resolution |
|---|---|
Undefined Process Ownership | Clarify roles and responsibilities through documented process ownership. |
Manual Dependency | Integrate automation and system-based workflows where feasible. |
Documentation Gaps | Maintain detailed SOPs, risk-control matrices, and audit trails. |
Lack of Awareness | Conduct regular training and awareness sessions for operational teams. |
Why IFC Matters in Today’s Business Landscape
Promotes a culture of compliance and accountability
Prepares organizations for external audits and due diligence
Reduces exposure to regulatory and reputational risks
Enhances the credibility of financial reporting in both domestic and global contexts
Need help? Book a call to understand our full range of service offerings
Book A Call
What Is Internal Financial Control (IFC)?
Defined under Section 134(5)(e) of the Companies Act, 2013, Internal Financial Controls refer to the internal policies and procedures adopted by a company for:
Ensuring orderly and efficient conduct of its business,
Safeguarding assets,
Preventing and detecting fraud and errors,
Ensuring accuracy and completeness of accounting records, and
Timely preparation of reliable financial statements.
Unlike statutory audits, IFC focuses on both financial and operational control environments, making it integral to a company's long-term compliance and risk reduction strategy.
Components of the IFC Framework
Component | Details |
|---|---|
Control Environment | Foundation for all other controls; includes governance structure, ethical values, and roles. |
Risk Assessment | Identification and analysis of risks that could hinder achievement of business objectives. |
Control Activities | Policies and procedures that ensure management directives are carried out effectively. |
Information & Communication | Systems that support the identification, processing, and dissemination of relevant information. |
Monitoring Activities | Ongoing evaluations of control performance to address deficiencies. |
IFC Applicability Under the Companies Act, 2013
Company Type | IFC Applicability |
|---|---|
Listed Companies | Mandatory; Board must affirm adequacy and effectiveness of IFC in the Director’s Report. |
Unlisted Public Companies | Applicable if: Turnover > ₹200 Cr, Borrowings > ₹100 Cr, Share Capital > ₹50 Cr, Deposits > ₹25 Cr |
Private Companies | Applicable if: Turnover > ₹200 Cr or Borrowings > ₹100 Cr |
Audit Committees, Board of Directors, and Independent Directors play key roles in assessing and affirming the implementation and performance of IFC.
IFC Implementation Roadmap
Business Process Mapping
Identify and document key financial and operational processes (e.g., Procure-to-Pay, Order-to-Cash, Record-to-Report).
Risk & Control Identification
Perform a risk assessment to identify control gaps and high-risk areas.Control Design & Documentation
Establish control activities to address identified risks and document them in a control matrix.Testing & Evaluation
Test the design and operating effectiveness of controls periodically.Remediation & Reporting
Address control gaps and generate periodic compliance reports for management and audit committees.Ongoing Monitoring
Use control dashboards, exception reports, and internal audits to track performance and deviations.
Examples of IFC Controls
Area | Control Example |
|---|---|
Procurement | Purchase orders above a certain threshold require dual authorization. |
Payroll | Independent reconciliation of payroll reports to time and attendance records. |
Revenue | System validation of invoice generation against sales orders. |
Fixed Assets | Periodic physical verification of assets and reconciliation with asset register. |
Compliance | Checklists to ensure timely submission of statutory returns (e.g., GST, TDS, ROC). |
Legal and Regulatory References
Regulation | Requirement | Applicable To |
|---|---|---|
Section 134(5)(e) | Directors must confirm IFC adequacy and effectiveness | Listed companies |
Section 143(3)(i) | Auditor must report on IFC implementation and effectiveness | All companies |
Section 177 | Audit Committee must evaluate IFC and risk management systems | Companies with Audit Committees |
Rule 8(5), Companies (Accounts) Rules, 2014 | Board must report on IFC adequacy with respect to financial statements | All companies |
Benefits of Effective IFC Implementation
Reduced Financial Misstatements
Proactive controls prevent errors or misstatements in financial reporting.
Fraud Prevention
Helps deter or detect frauds through segregation of duties and audit trails.Operational Efficiency
Standardized processes reduce delays and improve productivity.Regulatory Compliance
Ensures the company meets legal expectations and avoids penalties.Enhanced Stakeholder Confidence
Transparent governance strengthens investor, auditor, and regulator trust.
Challenges in IFC Deployment
Challenge | Resolution |
|---|---|
Undefined Process Ownership | Clarify roles and responsibilities through documented process ownership. |
Manual Dependency | Integrate automation and system-based workflows where feasible. |
Documentation Gaps | Maintain detailed SOPs, risk-control matrices, and audit trails. |
Lack of Awareness | Conduct regular training and awareness sessions for operational teams. |
Why IFC Matters in Today’s Business Landscape
Promotes a culture of compliance and accountability
Prepares organizations for external audits and due diligence
Reduces exposure to regulatory and reputational risks
Enhances the credibility of financial reporting in both domestic and global contexts
Need help? Book a call to understand our full range of service offerings
Book A Call
Frequently Asked Questions
What is Internal Financial Control (IFC)?
Is IFC mandatory for all companies?
How does IFC help prevent fraud?
What is included in an IFC implementation?
What is Internal Financial Control (IFC)?
Is IFC mandatory for all companies?
How does IFC help prevent fraud?
What is included in an IFC implementation?
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Contact Us Today
Can this platform track investments?
Does this platform offer retirement planning?
Is this platform free to use?
How does this platform work?
Can this platform track investments?
Does this platform offer retirement planning?
Is this platform free to use?
How does this platform work?
Frequently Asked Questions
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started
Internal Financial Control for Reliable Reporting and Risk Prevention
Book A Call
Internal Financial Control (IFC) is a critical component of corporate governance and risk management. It encompasses a set of structured policies, systems, and procedures adopted by companies to ensure the integrity of financial reporting, operational effectiveness, compliance with laws, and safeguarding of assets.
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started
What Is Internal Financial Control (IFC)?
Defined under Section 134(5)(e) of the Companies Act, 2013, Internal Financial Controls refer to the internal policies and procedures adopted by a company for:
Ensuring orderly and efficient conduct of its business,
Safeguarding assets,
Preventing and detecting fraud and errors,
Ensuring accuracy and completeness of accounting records, and
Timely preparation of reliable financial statements.
Unlike statutory audits, IFC focuses on both financial and operational control environments, making it integral to a company's long-term compliance and risk reduction strategy.
Components of the IFC Framework
Component | Details |
|---|---|
Control Environment | Foundation for all other controls; includes governance structure, ethical values, and roles. |
Risk Assessment | Identification and analysis of risks that could hinder achievement of business objectives. |
Control Activities | Policies and procedures that ensure management directives are carried out effectively. |
Information & Communication | Systems that support the identification, processing, and dissemination of relevant information. |
Monitoring Activities | Ongoing evaluations of control performance to address deficiencies. |
IFC Applicability Under the Companies Act, 2013
Company Type | IFC Applicability |
|---|---|
Listed Companies | Mandatory; Board must affirm adequacy and effectiveness of IFC in the Director’s Report. |
Unlisted Public Companies | Applicable if: Turnover > ₹200 Cr, Borrowings > ₹100 Cr, Share Capital > ₹50 Cr, Deposits > ₹25 Cr |
Private Companies | Applicable if: Turnover > ₹200 Cr or Borrowings > ₹100 Cr |
Audit Committees, Board of Directors, and Independent Directors play key roles in assessing and affirming the implementation and performance of IFC.
IFC Implementation Roadmap
Business Process Mapping
Identify and document key financial and operational processes (e.g., Procure-to-Pay, Order-to-Cash, Record-to-Report).
Risk & Control Identification
Perform a risk assessment to identify control gaps and high-risk areas.Control Design & Documentation
Establish control activities to address identified risks and document them in a control matrix.Testing & Evaluation
Test the design and operating effectiveness of controls periodically.Remediation & Reporting
Address control gaps and generate periodic compliance reports for management and audit committees.Ongoing Monitoring
Use control dashboards, exception reports, and internal audits to track performance and deviations.
Examples of IFC Controls
Area | Control Example |
|---|---|
Procurement | Purchase orders above a certain threshold require dual authorization. |
Payroll | Independent reconciliation of payroll reports to time and attendance records. |
Revenue | System validation of invoice generation against sales orders. |
Fixed Assets | Periodic physical verification of assets and reconciliation with asset register. |
Compliance | Checklists to ensure timely submission of statutory returns (e.g., GST, TDS, ROC). |
Legal and Regulatory References
Regulation | Requirement | Applicable To |
|---|---|---|
Section 134(5)(e) | Directors must confirm IFC adequacy and effectiveness | Listed companies |
Section 143(3)(i) | Auditor must report on IFC implementation and effectiveness | All companies |
Section 177 | Audit Committee must evaluate IFC and risk management systems | Companies with Audit Committees |
Rule 8(5), Companies (Accounts) Rules, 2014 | Board must report on IFC adequacy with respect to financial statements | All companies |
Benefits of Effective IFC Implementation
Reduced Financial Misstatements
Proactive controls prevent errors or misstatements in financial reporting.
Fraud Prevention
Helps deter or detect frauds through segregation of duties and audit trails.Operational Efficiency
Standardized processes reduce delays and improve productivity.Regulatory Compliance
Ensures the company meets legal expectations and avoids penalties.Enhanced Stakeholder Confidence
Transparent governance strengthens investor, auditor, and regulator trust.
Challenges in IFC Deployment
Challenge | Resolution |
|---|---|
Undefined Process Ownership | Clarify roles and responsibilities through documented process ownership. |
Manual Dependency | Integrate automation and system-based workflows where feasible. |
Documentation Gaps | Maintain detailed SOPs, risk-control matrices, and audit trails. |
Lack of Awareness | Conduct regular training and awareness sessions for operational teams. |
Why IFC Matters in Today’s Business Landscape
Promotes a culture of compliance and accountability
Prepares organizations for external audits and due diligence
Reduces exposure to regulatory and reputational risks
Enhances the credibility of financial reporting in both domestic and global contexts
Internal Financial Control for Reliable Reporting and Risk Prevention
Book A Call
Frequently Asked Questions
Can this platform track investments?
Does this platform offer retirement planning?
Is this platform free to use?
How does this platform work?
Can this platform track investments?
Does this platform offer retirement planning?
Is this platform free to use?
How does this platform work?
Internal Financial Control (IFC) is a critical component of corporate governance and risk management. It encompasses a set of structured policies, systems, and procedures adopted by companies to ensure the integrity of financial reporting, operational effectiveness, compliance with laws, and safeguarding of assets.
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started
Ready to Take the Next Step?
Connect with our team to discuss how strategic financial expertise can support your organisation’s growth, compliance and long-term goals.
Get Started