PRIL’S VISION & MISSION STATEMENT

 Vision: “To be largest and Integrated Rail Company in

Asia and make rail travel safer and faster”

 Mission: Domestic market leadership and significant

presence in international market through continuous
growth.
 NEED FOR INTERNAL CONTROLS

 In Order to achieve the Transparent Goal (Vision)

through the given mission and safeguard the
shareholders interest and assets of the company,
Management has invented the solution of implementing
sound internal control system through Internal Audit
department.
 SYSTEM OF INTERNAL CONTROLS

 An Internal Control system encompasses the polices,

processes, tasks, behaviors and other aspects of the
organization, that taken together.

 So the review of Internal Audit covers all controls,

including financial, operational and compliance controls
along with risk management.
 IMPORTANCE OF INTERNAL CONTROLS

 Sound Internal Controls and risk management supplement

entrepreneurship, they do not replace. i.e the role of
internal controls is to manage the risk rather than to
eliminate it.

 Internal control is one of the principal means by which

risk is managed. Other devises used to manage risk
include the transfer of risk to third parties, sharing risks,
contingency planning and withdrawal from unacceptably
risky activities. Getting the balance right is the essence of
successful business
PICTORIAL REPRESENTATION OF
VALUE ADDITION
 What is Internal Audit?

As per definition given by the Institute of

Internal Auditors :

“Internal auditing is an independent, objective

assurance and consulting activity that adds
value to Improves an organization’s operations.

It helps an organization accomplish its

objectives by bringing a systematic, disciplined
approach to evaluate and improve the
effectiveness of risk management, control and
governance processes”.
Principal Function

Internal auditor is to help an organization

achieve its objectives with the help of laid
down systems and processes.

The job of internal audit is not about telling

what is wrong but proposing what needs to be
done and also to offer a solution.
Is it necessary that all Internal Auditors are CA?

It is interesting that there is no legal

requirement to conduct internal audit through
CA firms.

It is being performed largely through corporate

entities that provide internal auditing and
consulting services.

Internal audit careers will be pursued by CAs,

management graduates, engineers, lawyers
etc.
Building an effective Internal Audit
team
The success of the internal audit practice
ultimately will be determined by the
competency of the audit team.

The building process of internal audit team

may be laid down as follows:

- Selection of right people

- train them adequately
- monitor the performance
- provide feedback
Scope - Heart of Internal Audit

Generally the scope is determined for balance

the auditor’s comfort zone, Auditee's needs &
intuitions, and the cost of providing services.

The ideal way of determining the scope is:

- Understanding the business of organization

- Review of risk management framework
- Review of audit coverage & findings of the
past and key areas.
- Ensure that scope covers all key areas of
Internal Audit namely compliance, risks,
controls, optimum utilization of resources,
and ethics & governance

- Obtain approval from audit committee,

statutory auditors and senior management
to ensure that no critical point is left out.

- Most important is revisiting the scope

periodically & ensure its amending from
time to time.
Creating Specialization skills
For development of specialization skills, the firm
will have to strategize and build competencies by:
- Developing an knowledge through attending
training workshops or materials.

- Identify a team for the specialization rather

than rely on an individual.

- Taking up pilot projects for clients free of

cost or nominal fees and do such project
jointly with persons from organization.
 BASIC CONTROLS & COMPLIANCES
REVIEW - CLASSIFICATION

1. Financial Controls
2. Capital Expenditure Controls
3. Procurement & Stores Controls
4. Statutory Compliances
5. HR & Establishment Controls
6. Sales & Tendering Compliances
7. Other operational Controls
8. Write Off & Rejections Controls
THANK YOU
& Queries