Industry should adopt internal audits in their own interest: CA Bagdia

Source: The Hitavada      Date: 02 Jan 2018 10:15:27


Business Bureau,

In the recent times, the importance of internal audits has increased substantially. People have started realising the importance of having strong internal controls along with effective internal audits. Audit is normally understood to be restricted to only accountancy but actually it is a very wide concept. Internal audit is a very effective tool and should be adopted by industry in their own interest, said CA Omprakash Bagdia.

He was speaking as a chief guest at a seminar organised by Nagpur Branch of ICAI. He contineud, auditors should always explore and should give multiple suggestions specially when they are working with the management as internal auditors. “We should continuously review the existing performance of the industry and required suggestions should be given to the management. The job of internal auditor is not restricted to any particular field. CAs should try to act as a complete solution provider which will definitely make the internal audits more impactful,” he said.
“Also it is required that detailed SWOT analysis should be done to understand the strength, weakness, opportunities as well the threats which can be of immense benefit to the client. Normally, it is seen that the management is more interested in understanding the financial risks and related aspects through internal audits.

It is important the CAs should realise the importance of other risks and should explain the management which will make the audit more effectual. We should always explore about the other risks associated with the industry and should alert the management about the same in timely manner,” Bagdia said.

In almost every sector, possibility of fraud is very high. For that, again effective internal audits can be very helpful in identification of such fraud prone area with development of strong internal controls. Every industry has a different style of working and has various unique things. It is important that detailed study should be done of a particular industry and should identify the best practices.

“Regular and detailed study of all such things will help us to discharge our responsibilities in a better manner. After detailed audit, reporting is another important area and we should try to prepare a detailed report in a systematic manner. The language of the report should be kept lucid so that the management as well as the staff find it easy to understand. The role of CA is not restricted to only submission of audit report. To really add value to the assignment, it is equally important to discuss with the management the various findings during the audit. Necessary compliances with regular follow up are equally expected from a strong internal audit,” he said.

In every Industry, there are multiple ways of doing the business and the compliance. For smooth functioning, it is very important that there should be very strong internal controls as well as strong system which should be designed and should be implemented. “Here, again the CA can play a very important role with the management in designing and implementing the internal system. All what is required that auditors should explain the importance of the internal audit to the management which will help them to adopt the same for the betterment of industry,” he suggested.

CA Sandeep Jotwani, Chairman of Nagpur Branch of ICAI in his welcome address said that there was time when the job of CAs was restricted to only compliance practice. Though, CAs are good in understanding Taxation Laws and can do well in its compliances, but with time industry has realised the effectiveness of internal audit done with the help of CAs. “The number of tax compliances are increasing day by day and for doing the same in timely manner, strong internal controls are very much required. Strong internal control also with regular review through internal audits has definitely proven the usefulness of internal audits in timely compliances and avoidance of penalty,” he added.

CA Nitin Alshi and CA Bharat Jeswani threw light on ‘Internal audit from analytics, consulting to fraud detection.’ CA JIten Saglani co-ordinated the programme. Prominently present were CA Umang Agrawal, CA Suren Duragkar, CA Saket Bagdia and others.