One of the key thought regarding future of Internal Financial control (IFC), which is teasing most of lawmakers is the way IFC is shaping up in India. Most of company have taken it as an item in the checklist for year-end books closure, even as per industry experts large number of companies who have implemented IFC, have actually started implementing post 31st March 2016, whereas as per law it has to be implemented and tested before that date.
While year 1 was when most of companies having awareness about IFC reacted to its existence, but the prospect in coming years is looking bleak.
Year 2: historically for companies for following internal control requirements, this is the year when companies choose internal control activity as real value adding activity or just a compliance paper work. But, looking at scenario in India, very few companies are looking IFC as a value adding activity and there are more chances of it being followed as just a paper work activity than adding value. This year just few samples will be collected to justify the auditor needs and to sign the board report.
Generally, countries where similar control frameworks have been mandated by law, chooses to automate the internal control process and reduce data punching requirements, this gives them opportunity to test framework design & control effectiveness more comprehensively. But when we went out to check the available technology solutions in India, we found there are no specific tools available for IFC compliance in India, even some of the global SOX compliance tools are not focussing India as a market.
So the question is simple and it is directly to the same lawmakers who are worried that IFC is failing, was is correct to implement IFC across all companies at one go or there was have been better option to implement it like the way IFRS is being inculcated?