The Companies Act, 2013 had introduced Section 143(3)(i) which requires the statutory auditors of companies to report on adequacy and operating effectiveness of internal financial controls system of the company.
In Sept. 2015, the AASB of ICAI had issued the Guidance Note on Audit of Internal Financial Controls over Financial Reporting to provide guidance to the members on this new reporting requirement.
Now the AASB of ICAI has brought out the “Implementation Guide on Audit of Internal Financial Controls over Financial Reporting with Specific Reference to Smaller, Less Complex Companies”, containing FAQs arising from practical difficulties faced by auditors.
This Implementation Guide is in the form of Frequently Asked Questions (FAQs) arising from practical difficulties faced by auditors in the audit of internal financial controls in the case of smaller, less complex companies and along with responses thereto. As per ICAI, the members may note that this Implementation Guide should be read in conjunction with the aforesaid Guidance Note while carrying out audit of internal financial controls in the case of smaller, less complex companies.
This Implementation Guide discusses how the guidance given in the Guidance Note may be applied to audits of internal financial controls over financial reporting in case of smaller, less complex companies and addresses some of the practical difficulties that may arise in audits of internal financial controls over financial reporting of such companies.
Implementation Guide of ICAI on “Audit of Internal Financial Controls over Financial Reporting