Welspun India

1. Vendor Governance:
Welspun is another case to add to the long list of firms that have come undone
with reputational issues connected to supply chain risks.
We suspect the audit will show that one or more of Welspuns suppliers have been
lying over the provenance of the cotton. But it is simply not good enough for
Welspun to hand off the blame in that way.
Vendor Governance is an area, where the sooner internal audit gets involved, the
better. While third-party relationships provide many benefits, they also present risks,
and management cannot outsource accountability for risks. Clarity at the front-end
smoothens the relationship on both sides, with many vendors appreciating early
notice of errors and contract interpretation issues rather than lengthy back-end
recovery proceedings.

2. Key Performance Indicator (KPI) assurance

Egyptian Cotton bedsheets supplied by Welspun India to retail clients have
turned out not to be from Egypt after all.
Gauging KPIs with an auditing scale is critical to improve related processes,
systems, and controls. Management reports on leading trends and practices, etc.
and statements about customer service and product quality, demand accurate and
reliable KPIs.
Firstly, internal audit should determine whether management is tracking the right
KPIs for what is being measured and whether the underlying processes are welldesigned and controlled, and then, over time, provide assurance on the data and
processes.

3. Supply Chain Process Audit:

A lot of products at various stages, like cotton, yarn, fabric is sourced by Welspun
India externally. Hence there is a need to audit the supply chain processes.

Implement end-to-end supply chain risk management to reduce vulnerability

to supply chain disruptions. A standardised model strives to provide greater
visibility into emerging risks and opportunities.

Make sure tenders are reviewed by internal audit, and once a supplier is
appointed, that contract negotiations with the selected supplier include access
for internal audit to asses a suppliers own risk management and controls. Or,
better yet, integrate them into your enterprise audit system.

4. Planning for dynamic internal audit and crisis management:

In crisis situations, its important to be well-prepared and consider preempting
the news and proactively delivering messaging to gain first-mover advantage
in shaping future content. Instead, Welspun found itself in a purely reactionary
position.
Equally important, before engaging with media and stakeholders, tough
questions should be anticipated and addressed with development of
thoughtful, on-point responses.
Dynamic internal audit planning can create a flexible, adaptable approach in which
data analytics and continuous monitoring supplement annual risk-based
assessments. Dynamic internal audit planning uses qualitative and quantitative
methods on a continuous basis to identify issues and allocate resources to key risks.
Audit planning can also establish whether management has identified the full range
of potential crises and their likely impacts. Crisis management planning is important
to ensure that impacts of a crisis do not compromise stakeholders interests and the
organizations operations and data.

5. Routine Operational Audit by External Agency:

Welspun has now announced the hiring of an outside auditor to review its
supply chain systems and processes. The company is in the process of
engaging one of the big four auditors to carry out the review.
Been it a routine Operational Audit by an External Agency, there would not have
been a need of engaging an External Agency for Investigative or Forensic Audit.