Section 143(3)(i) of the Act requires the auditors’ report to state whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls. The auditor’s objective in an audit of internal financial controls over financial reporting is, “to express an opinion on the effectiveness of the company’s internal financial controls over financial reporting.” It is carried out along with an audit of the financial statements.
Internal financial controls are “the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.”
