Under Section 143(3)(i) of the Companies Act, 2013 (2013 Act), an auditor is required to state in their audit report whether the company has an adequate internal financial controls (IFC) system in place and the operating effectiveness of such controls. Explanation to Section 134(5)(e) of the 2013 Act defines IFC to include policies and procedures adopted by the company for ensuring orderly and efficient conduct of its business, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.

The Institute of Chartered Accountants of  India (ICAI) had issued a Guidance Note in November 2014. This guidance note was revised subsequently and the ICAI issued a revised ‘Guidance Note on Audit of Internal Financial Controls Over Financial Reporting’ (Guidance Note) on 14 September 2015. This issue of First Notes provides an overview of the Guidance Note issued by ICAI. 

For a copy of the Guidance Note issued by the ICAI, please click here