Have you ever come across a fraudulent incident in your business? What about errors and mistakes that have had a negative financial impact, directly or indirectly? Didn’t the incident make you ‘react’, by altering the way the related activities were being conducted? What if your operational risks were ‘proactively’ anticipated and mitigating controls institutionalized? Wouldn’t the loss of time, effort and money be reduced, in such a scenario?
Broadly, business risks are actions or inaction that could adversely affect an organization’s ability to achieve process objectives and thus, hinder the implementation of business strategies. An effective system of controls and monitoring measures helps to manage business risks so that business objectives are achieved. For a business to effectively move towards attainment of its mission, it is imperative that all risk owners, including senior management and business units, integrate their efforts towards managing business risks.
Over the last decade or so, with the downfall of some of the large entities, we have witnessed a paradigm shift with respect to increased accountability of management and focus on improving corporate governance, globally. Market regulators have also mandated stringent requirements, with the objective of restoring investor confidence in the capital markets. Notable regulations include the Sarbanes Oxley Act (for entities governed by the US SEC), the Clause 49 requirements (for entities listed in India) and the New Companies Act, which lays stress on the term ‘internal controls’.
Besides the statutory mandates, we have witnessed a growing need for assessment and implementation of internal controls amongst the MSMEs. Ambitious entrepreneurs and business houses are realizing the benefits of internal controls, especially their impact on the ‘speed of growth’.
Given the increasing speed of change and dynamism in today’s business environment, organizations must identify, assess and mitigate emerging risks, while also keeping a check on their existing business and control environment. Through internal audit, we help an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.
Our risk based internal audit solution, primarily, focuses on the inherent risks involved in the activities and systems. It provides an assurance to the Board that risk management processes are managing risks effectively, in relation to the defined risk appetite level. The assurance part of our work involves telling managers and governors how well the systems and processes, designed to keep the organization on track, are working. We complement this with consulting, to help improve those systems and processes, where necessary. Unlike traditional audit, our solution focuses on continuous improvement, which is the need of the hour.