RISK ADVISORY
- Minimise Financial risk
- Regulatory compliant
- Regulatory compliant
Risk is a persistent and pervasive aspect of business today, especially in growing companies. Risk management is evolving as a strategic driver than a preventive measure.
Our risk advisory services start with understanding your business, organisation culture, Processes in place, and priorities to achieve the given objective. Our understanding of these aspects of your business, coupled with our global experience and industry-specific knowledge, enables us to generate value and empower you to achieve the goals seamlessly.
The value that Risks advisory creates is synonymous with operational excellence. The process of maximising business process starts with identifying and predicting the immitent threats and obstacles. The process continues with resolving and mitigating said threats/obstacles enhancing the value of these operations.
Our approach towards risk advisory is to develop customised value propositions and solutions for organisations, through interrogating, analysing, and understanding the organisations information assets, policies, procedures, risks, controls, current and future strategic operational objectives. We do this through following services – Cost reduction, Management audit, Internal Finance control and System audit.
Cost Reduction
Cost reduction aims at eliminating the wasteful elements in business operations. Such elements create inefficiency in the business and can bring immediate savings. Cost reduction should aim at reduction of the cost without compromising the quality of the product. This can be achieved by introducing more suppliers in the business, using alternate material, and identifying gaps in process.
There is always a scope of the improvement in any areas and that is why cost reduction is a continuous process. It comprises of critically examining various elements of costs and each aspect of the business (i.e., procedures, methods, products, vendor, and supplier management including financial planning, analytics, and ongoing monitoring of agreements and contracts.
There is always a fear that cost reduction initiatives will damage the relationship with existing vendors. However, it will ultimately result in setting right expectations of deliverables raising the quality and accountability of the vendors. It helps in cutting costs and improve delivery while, strengthening relationships with trusted suppliers.
Our team at PRANV helps its client to realise savings on all categories of direct and indirect spend.
Management Audit
A management audit includes the analysis and assessment of the competencies and capabilities of a company’s management in carrying out organisation’s objectives.
The goal of a management audit is to identify the weaknesses of the management team. The audit is most often carried out at company level; However, it can also be limited to a particular business segment. The goal is always to find about effectiveness of management and identifying areas of improvement.
Areas that a management audit will cover mainly include human resources, marketing, budgeting, operations, finance, information systems, and corporate structure.
The management audit process consists of interviews with management and employees, an analysis of financial statements and performance, a study of a company’s policies and procedures, an evaluation of training programs, the hiring process, and other areas within an organization.
When the audit is complete, the external audit company will not only provide its findings but will most often provide an entire plan for the board of directors to implement so that the company can operate at an optimal level.
The Scope of Management Audit:
A management audit is not limited to financial review of business. It also analyses other operational areas. It has an efficiency for assessing management from top to lower level. Few main scopes of management audit are described below:
- Calculate the Effectiveness of the Management- It audits the entire level of management of a company.
- Execution of Principals and Policies- It reviews whether the policies and the principles deployed by the company is effective and successful.
- Locate and Examine the Differences-It helps to identify the differences in operational areas to improve productivity and if the pattern set by the company is not fulfilled.
- Suggest for Improvement- The management audit identifies and suggests improvement in areas, e.g., purchase, sale, finance, administration, human resources, etc.,
Objectives of Management Audit:
- Verify Efficiency- It aims at increasing productivity at all the levels of management.
- Give the Recommendation to Increase Efficiency- The management audit analyse in capabilities at various levels of management and provides suggestions to enhance the efficiencies.
- Evaluates the Policies and Planning- Audit and evaluates the policies and planning structured by the management and analyse if it is appropriately implemented.
- Increase Profit- Increase the profit by providing solutions to maximise the company’s resources in a valuable way.
Internal Financial Control
In 2009, Audit processes adopted by Indian auditors unable to detect the financial fraud committed by management of Satyam. The Satyam Scandal compels Indian legislators to search for the best practices across world like Sarbanes Oxley regulations in United States (US), Turnbull Guidance in United Kingdom (UK) and JSOX in Japan to raise the bar of corporate governance in India. MCA notifies IFC regulations via Sec. 143(3)(i) in Companies Act,2013. The section doesn’t apply to the audit reports of private limited companies / One person Companies having annual turnover of less than Rs. 50 Crore or has aggregate borrowings of less than 25 Crores from banks, Financial institution or body corporate at any time during the financial year issued after 13th June 2017.
Internal financial controls are defined in the explanation to Section 134(5)(e) of the companies Act 2013 as the policies and procedures adopted by the company for ensuring
- the orderly and efficient conduct of its business, including adherence to company polices
- safeguarding of its assets
- Prevention & deduction of frauds and errors
- Accuracy & completeness of accounting records and
- Timely preparation of reliable financial information
Framework of IFC
Management and Auditors need some set of benchmarks to assess the adequacy and effectiveness of IFC. The benchmarks are called as framework. The framework of IFC is given by Standard on Auditing (SA) 315 issued by the Institute of Chartered Accountants of India (ICAI). The framework explains the following components.
- Control Environment
- Risk Assessment
- Control Activities
- Information system and communication
- Monitoring
We at PRANV, assists the companies to implement the IFC to help in achieving good corporate governance.
System Audit
System audit is a systematic and independent review of activities and related results to assess their comply with the planned arrangements. Whether these arrangements are implemented effectively and are suitable to achieve objectives.
A system audit is important as it allows a company to review the performance of its operational systems.
By performing a system audit, companies can:
- Comparison and evaluation of the actual performance vs. planned
- Validate that the objectives pursued by the organization remain relevant
- Ensure reliability of systems used.
- Review system records to ensure systems operate based on specifications
- Identify vulnerabilities and risks
- Define a mitigation plan to better achieve its objectives
- Monitor its operational systems to ensure they meet the objectives on an ongoing basis.