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CA, CS, CMA : Request for Proposal for Appointment of Chartered Accountant/Cost Accountants Firm as Internal Auditor of PFRDA for the F.Y.2021-2...
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Company Law : Government imposes a penalty of ₹2.5 lakh on Systematix Securities Ltd for not appointing an internal auditor during FY 2022-23,...
Company Law : Read the adjudication order on Kudos Finance & Investments Private Limited as MCA imposes a penalty of Rs. 4.50 lakh for violating...
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Using the analysis done offline in India, the auditors were able to focus their energies during a short visit on the core-concern areas and arrive at conclusions that were startling. Considering the focus on accountability in the US with the Sarbanes-Oxley legislation, the CEO and the CFO were taken aback at the status of internal controls in their organisation. Emergency measures to establish an elaborate exercise for implementing a robust internal control system with self- ssessment questionnaires was taken. Considering the success that Raj and his team had in meeting these new challenges, the management asked Raj whether his team would take this assignment in addition to the audit responsibility, which he gladly accepted. This resulted in considerable cost savings. Further, looking at the tremendous cost savings and approach towards auditing by Raj and his team, a performance bonus was sanctioned.
The top management of a chemical company, with 400 crores turnover, is extremely happy with its internal audit department specially with the cost saving measures recommended by the department. The company has two plants in Thane (Mumbai) and Vapi (Gujarat), with its corporate headquarters. The company is presently facing problems with high cost of production and is finding that the products manufactured at its Thane and Vapi plants are not competitive vis-à-vis other chemical manufacturers in the organised sector. The company also finds that the shutdown hours for the factories were quite high. The Managing Director holds a meeting with the Chief Internal Auditor (CIA) and requests him to conduct a review of Thane and Vapi plant production units’ operations and suggest improvement measures to ensure that the plant is more efficient and effective to maintain its competitiveness vis-à-vis the threat from competitors. He also informs the CIA how important it is to reduce cost of operations, failing which he is concerned that the units would have to be closed down in the near future.
In a large engineering company operating in Western India having global operation, a new Chief Audit Executive (CAE) was appointed. The CAE had joined this organisation based on the public positioning of the group but felt disappointed within a few months of joining. The organisation had grown organically and was largely family-owned with the senior management being hands on with the operations of the company. The Internal Audit culture had not yet matured and was largely focussed on ‘compliance’. The budget was not sufficient as the management had very low level of expectations from the internal audit function which was mainly compliance-driven.
A leading consumer goods industry in India, with a turnover of more than Rs.250 crores with activities spread across the country covering both the urban and rural markets, has been facing a downward trend in its sales along with rising marketing costs. Top management has been grappling with a changing consumer preference trend guided by the entry of a strong MNC competitor. Some major promoters and key marketing personnel have changed loyalties and have shifted to competition. The Board has been concerned about this disturbing trend and has been reviewing the strategies being adopted by the company to adapt to these changes and retain the earlier good performance. Audit Committee meeting held along with this Board Meeting focussed on this important business issue.
Background :In the IT Industry, the key asset is the human resource. Payroll for an information technology company therefore forms the single largest component of expense. The success of an IT based organisation depends on the size and quality of its human resource. The activity is performed by these resources at the client’s site which often is spread over the world and in the development centres within the country. This results in movement of resources between clients and development centres.
An engineering company, with a turnover of Rs.350 crores, is into manufacturing and giving services for cooling appliances like air-conditioners — window, split, cascade, etc., refrigerators, water coolers. Its main Stores is at its three factories located at Mumbai, Vapi and Hyderabad. Mumbai factory is the largest factory located at Thane with other two units at Vapi and Hyderabad. Inventory in Stores other than raw materials and capital items is around Rs.3.0 crores at Mumbai and Rs.1.3 crores and Rs.1.2 crores at Vapi and Hyderabad respectively.
The management wants the internal auditors to now assess the procurement activity in terms of process improvements with optimal controls, compliance with laid down systems and procedures and cost rationalisation. The engineering company, whose turnover is 350 crores, is into manufacturing and giving services for cooling appliances like air-conditioners — window, split, cascade etc., refrigerators, water coolers.
Audit Committee Chairperson has indicated to the partner-in-charge of the outsourced firm carrying out internal audit that the coverage of personnel audit would be desirable every six months. Chief Executive Officer and Chief Financial Officer agree with the importance given by Audit Committee Chairperson to Personnel area. They have indicated the importance of this area to the partner-in-charge and also cautioned him that this being a sensitive area, needs to be handled with care. This exercise should be done by experienced persons.
