The revised Companies Act 2013 has put the onus of ensuring adequate controls over financial controls on the senior management team including the Board of Directors, Members of Audit Committee, Independent Directors and Statutory Auditors.

Compliance with this statutory requirement necessitates “Identification of associated risks coupled with the existing key / non-key controls” and “Continuous monitoring of the effectiveness of the defined controls”. The said exercise needs to be carried for all business processes relevant to individual legal entity / location. Monitoring control effectiveness on an ongoing basis for all business processes is typically a manual activity.

Furthermore, it is a challenging task for large geographically spread-out organizations as they do not follow a process and framework based approach to control design, testing, reporting and monitoring. As a result, you can never be sure about the extent of control monitoring and management in place, and the level of risk coverage with respect to financial reporting.