Managing Internal Financial Controls – Recent Amendments

Dear Professional Colleague:

Internal Financial Controls means 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.

As per Section 134 of the Companies Act, 2013, every listed Company has to ensure that such internal financial controls are adequate and are operating effectively.

Further, Section 143 of the Companies Act, 2013 casts a responsibility on the statutory auditors of the Company to report, in case of all Companies, whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.


The Ministry of Corporate Affairs (MCA) has, vide Notification No. G.S.R.. 583(E). dated 13th June, 2017 exempted select Private Companies from the provisions of Internal Financial Controls, which fulfill the following criteria viz.

  • which is a one person company or a small company; or
  • which has turnover less than Rs. 50 crores as per latest audited financial statement or which has aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the financial year less Rs. 25 crores.”.

MCA, vide Circular No. 08/2017 dated 25th July, 2017 has clarified that above exemption shall be applicable for those audit reports in respect of financial statements pertaining to financial year commencing on or after 1st April, 2016, which are made on or after the date of the said notification.

Our team of experts at eMinds Legal LLP specialize in Internal Financial Controls including drawing up of process flow charts, drafting the Risk and Control Matrices and Management Testing of controls.

Also, we have some great Software (COMPLINITY) which can automate the Internal Financial Controls and internal audit in your organization.

Please free to reach out to me for any further guidance or assistance on Internal Financial Controls or anything related to Governance, Risk or Compliance.



Sumit Pahwa

Co-founder & Partner, eMinds Legal LLP

Simplifying Law

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About Sumit Pahwa

Sumit Pahwa | Partner

A Corporate Lawyer & Company Secretary, Sumit has over 17 years of experience in dealing with the Corporate Legal and Compliance issues of small, medium and large corporates and is the founder partner of the law firm “eMinds Legal”, a Corporate Law Firm based in Gurgaon specialising in Corporate Secretarial, Corporate Legal and Compliances.

Sumit is an expert in Corporate Laws, Governance, Risk & Compliance and has independently led investigations related to Sexual Harassment, Fraud, Cybercrime and whistle blower cases.

Sumit is also the Lead Author of “Corporate Law Referencer” - a leading book on Companies Act, 2013 and LLP Regulations and published by Lexis Nexis.

Sumit is a regular speaker at the Institute of Company Secretaries of India, various management colleges and several small and large corporates on Corporate Laws, Sexual Harassment Laws and Compliances.

Sumit leads the Corporate Legal vertical at eMinds Legal and is supported by a strong team of Corporate Lawyers at eMinds Legal who advise corporates for their routine corporate legal requirements.

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