The Journey

Volume 2
Chief Audit Executives
Round Table
Conference

www.pwc.com/india
Introduction Background
The journey of the roundtable conferences
began with discussions among a few
Chief Audit Executives (CAEs) who were
deliberating on the need to have a forum
that would allow them to network with
their peers on a regular basis.
PwC offered to facilitate such discussions
in a structured manner and the first
roundtable conference was held in
October 2009.
In 2011, the journey of the roundtable
conferences continued with a wide-range
of insightful discussions on areas where
internal audit functions can contribute.
Objective • “Lights, camera, action... scripting Volume 1 of ‘The Journey’ covered the
internal audit for a changed world” - following topics:
The conference was envisioned to bring
Results of PwC’s Global Internal Audit
together creative and forward-thinking • Positioning for future success:
Survey 2011
CAEs and provide a forum for open Transforming internal audit
exchange of ideas on diverse issues faced by • Connecting the dots: Overview of
• Risking it all: A case study
the profession in India. financial reporting standards
• The financial fraud at Wipro
The conference also aims to assist young • Tax function framework: Direct taxes
and upcoming CAEs in enhancing their and internal audit • Control self assessment
knowledge through interactions with more • Audit committee effectiveness: What • Emerging risks
experienced internal audit professionals. works best • Risk assessment process
This second volume of ‘The journey’ • Indian Budget 2012: Analysis of key • PwC’s Global Internal Audit Survey 2010
continues our initiative of capturing proposals
the stimulating discussions into a brief • Bridging the gap between diverse
whitepaper, covering the following topics: • Companies bill: Challenges and expectations of various stakeholders
opportunities from the internal audit function
• Trends in information technology
• ‘Aligning internal audit: Are you on the • Role of internal audit in addressing
• Transforming internal audit by right floor?’ -Results of the PwC’s Global fraud risk
leveraging technology Internal Audit Survey 2012
For more details please visit
• Indirect tax: Integral to internal audit • Discussions on revised Schedule VI www.pwc.com/in/en/services/risk-
advisory-services
Trends in Information Technologies
Seventh Round Table Conference - 18 March 2011

Overview
The emergence of social media, e-mobility
and cloud computing represents significant
opportunities for companies to interact
with employees and customers in ways
never before considered. Underlying
these opportunities are heightened risks
associated with reputation and brand
damage, data leakage and security.
However, if these risks are managed well,
opportunities for reduced costs, increased
reach and access to new revenue streams
can be immense.

4 PwC
Key Pointers Many CAEs felt that organizations may be
hiding behind the risks associated with
The discussions revolved around 4 major
the usage of such technologies, to limit
upcoming technologies:
their investments in these transformative
• Cloud Computing
business solutions.
• Semantic Web
• Social Networking CAEs play an important role to help their
• 4G companies evaluate how these technologies
can support the company’s strategy in
The participating CAEs agreed that only
conjunction with other planned system
a few companies are adequately prepared
changes.
to adequately understand and counter
risks associated with these emerging As their organizations look to take
technologies. advantage of these emerging technologies,
CAEs would need to assess how the
The CAEs discussed the need for their
provider will address the variety of risks
function to assist with the development of
associated with these technological
policies and guidelines that address the
advances such as:
specific needs of their companies, while
balancing risks with the opportunities • Security of sensitive information
represented by technology. (including employee data, customer data
and intellectual property) against loss
The participants understood that
or theft
domains such as cloud computing and
social networking are poised to be the • Integrity of the data on account of
most transformative, technology-driven contamination
development in business since the • Data backup and recovery
emergence of the Internet.
• Exposure to unauthorized access
There is a need to recognize and capitalize
on these technologies to lower costs
and enhance flexibility & speed to fuel
innovation.

The Journey 5
Transforming Internal Audit
by Leveraging Technology
Seventh Round Table Conference - 18 March 2011

Overview
In the current environment where
technology-enabled solutions are being
increasingly used for running operations
as well as for financial reporting, internal
audit executives also need to leverage
technology to a greater extent in their
effort to manage risks more efficiently
and effectively.
The traditional audit methodology of time-
intensive manual control testing results
in a high cost of compliance, inefficient
utilization of resources and inability to
form a view on the entire population.
Managements are questioning this
traditional approach and are looking from
a higher return from their internal audit
functions. This is therefore driving audit
functions to also turn towards technology,
including use of in-built modules of ERP
systems to test controls. This change can
also allow the internal audit community to
centralize and standardize.

6 PwC
Key Pointers Technology enables internal audit
to deliver better and more insightful
The discussions highlighted that although
audit results
most internal audit functions have been
leveraging technology, the breadth and CAE agreed that effective use of
depth of that involvement varied widely. technology often allows them to study
entire populations of data instead of only
It was felt that in an IT enabled
a sample, thereby allowing them to look
environment, at a minimum IT General
at a larger picture. Further, technology
Computer Controls (ITGCC) such as
facilitates the study of trends in the data
physical & logical access, backups, etc. need
over a period rather than looking at
to be part of the standard internal audit
static data. These enable CAEs to reach
methodology. Further, the participants
more meaningful conclusions and deliver
also agreed that there is a need to have a
insightful recommendations.
far more integrated audit approach which
cover both, the IT as well as non-IT aspects Using inherent controls present in
of a process. ERP systems to improve effectiveness
The discussions brought forth some ERP solutions like SAP, Oracle Applications,
key points that play a significant role in etc. have a number of inherent as well as
understanding the eminence of technology configurable controls to manage process
in internal audit: risks. CAEs generally agreed that the
current levels of knowledge of what these
Effective use of technology allows
controls are and how these have actually
better utilisation of resources
been configured in the ERP in their
Companies are increasingly looking at the organizations is an area that needs more
‘return on investment’ from their internal work. It was felt that once this challenge
audit functions. Internal audit therefore is overcome, then this understanding
is under pressure to deliver more with the combined with ITGCC testing will lead to
same resources and their ability to harness quantum improvement in the effectiveness
the power of technology is emerging as a of audit functions.
critical factor towards this success.

The Journey 7
Indirect Tax: Integral to Internal Audit
Eighth Round Table Conference - 1 July 2011

Overview Key Pointers • Impact of replacement of exemptions by

refund of taxes
With the proposed implementation of The session was around an overview of
Goods & Service Tax (GST), the framework indirect taxes in India with insights into • Product pricing:
for indirect taxes in India is poised to the current and proposed central and state -- impact on channel partner
undergo a significant transformation. framework. profitability
This transformation presents both The participants were then provided with -- product affordability
opportunities and threats. To effectively a brief on the current state of play with
make the most of these opportunities and regards to the transition to GST. -- product reach/market share
mitigate the possible threats, organizations The discussions then moved to the key Need to re-Design
need to redesign their processes. opportunities and threats arising from the
The proposed GST regime would lead to
transition to GST. Some of them are listed
centralization of the indirect tax function
below:
There is increasing scope and value to be
• Major opportunity in the form of supply- gained from tax administration functions
chain reengineering to implement and utilize an IT-enabled
-- Possibility of lowering cost of platform and processes, such as tax-data
operations due to: warehousing, online tracking of inter-state
movements and information exchange
• Compression of the supply chain among others.
• Disintermediation
Audit of Indirect Taxes (Objectives,
• unfettered credits throughout the Scope and Areas of Concern)
chain
Internal audit functions can play a
-- Centralization and uniformity of significant role in meeting the following
sourcing. objectives:
-- Serious challenges in the traditional • Ensure that the existing business
hub-and-spoke distribution model transactions comply with the provisions
-- Impact of tax payments on stock of tax laws and all tax liabilities are
transfers accurately discharged under the relevant
indirect tax legislations.

8 PwC
• Identify any potential liabilities arising • Verification of the taxes to ensure that
from business transactions. they have been deposited correctly and
within the specified time limit
• Identify opportunities for tax planning
in order to reduce the incidence of tax The participants were then taken through
under the relevant legislations. specific case studies on areas of concern
such as the following:
• Ensure smooth transition to the GST
regime with a tax-efficient business • Associated enterprises transaction
model and comply with the GST • Exemption on account of R&D Cess
legislations from the beginning.
• Expats
The scope of audit could involve review of
the following: • CENVAT credits
• Present business model, practices • Reverse charge – Credits
and positions taken under each of the • Subcontractor
specified business transactions in the
existing business model • Centralized registration

• Agreements and registration certificates • Barter transactions

• Returns filed under various tax laws to • Cost-sharing arrangements

ensure that all the mandatory returns
have been correctly filed within the
specified time and that the details
provided therein match the financial and
tax records
• Valuation of the services rendered, to
check whether they have been correctly
determined and all the exemptions,
concessions and benefits claimed are in
line with the law

The Journey 9
Lights, camera, action…
scripting internal audit for a change
Eighth Round Table Conference - 1 July 2011

Overview The 7th Annual Global Internal Audit Key Pointers

Survey conducted by PwC revealed a
The world in which internal audit The study identified three important focus
disparity between the main focus of CEOs
operates continues to change, and the areas for internal audit departments:
and internal auditors when it comes to risk
14th Annual Global CEO Survey results
areas such as growth and technology. While • Strategic growth: Emerging markets,
reflect confidence, innovation and a need
CEOs are focused on growth in newer mergers & acquisition activity,
to bridge gaps in the skill-set, to meet
geographic markets, internal auditors innovation and new product
emerging growth opportunities.
indicated that they are least involved in development
Businesses have started focusing on those areas. Similarly, while 70 percent • Information technology: Security and
emerging markets, adopting innovative of CEOs plan to invest in IT, less than 25 data protection risks related to emerging
technologies and responding to a rapidly percent of internal auditors plan to be technologies such as eMobility and cloud
changing regulatory environment. In involved in auditing the risks surrounding computing, data loss and distribution of
addition to being the key to succeeding cloud computing or social media. malware
in today’s business environment, these
Further, CEOs and internal auditors have • Regulation: The expanding reach of
strategies also underpin the critical risks
a shared focus on government regulation, regulations and changes due to financial
facing today’s businesses.
as overregulation ranks among CEOs’ top reform
As internal audit functions strive to concerns and nearly 60 percent of internal
transition from overseeing financial auditors expect to increase their attention
controls to advising on a wider range of to regulatory compliance programs in their
strategic, business and compliance risks, it audit plans.
is imperative that they establish credibility
with leaders of the organization by
demonstrating their skills and capabilities
in these areas.

10 PwC
Questions to consider
As internal auditors re-evaluate their roles,
the Survey suggests they ask themselves
the following questions:
• Am I leveraging my unique vantage point
within the company to provide a clear
point of view on the risks associated with
the changing business environment?
• Have I taken action to adjust capabilities
and approaches to today’s business
environment?
• Am I taking steps to prepare my people
for what they will be doing two to three
years from now?

Leading internal audit functions look beyond the confines of their

department and seek partners both within and outside the business.
Audit teams of every size can benefit from some form of co sourcing
and an active interaction with the business and compliance functions
to identify and manage significant risks. That’s our most significant
takeaway from speaking with leaders in the profession.

The Journey 11
Connecting the dots:
Overview of financial reporting standards
Ninth Round Table Conference - 23 September 2011

Overview Key Pointers Ind-AS

In early 2010, the Ministry of Corporate The discussion highlighted the background Ind-AS standards will be notified. Its
Affairs (MCA) issued various press of the worldwide conversion to IFRS, expected that IFRS may have India -specific
releases on the International Financial followed by the roadmap to the adoption notifications as well. The group discussed
Reporting Standards (IFRS) roadmap and of the Converged Indian Accounting some basic differences between IGAAP and
the convergence plan for India specifying Standards (Ind-AS). IFRS surrounding:
the convergence date to be 1 April 2011, • Business combination with regard to
There was also detailed discussion on the
but extendable to 2014 for select Indian accounting for gain on bargain purchase
impact of the proposed change.
companies.
Fundamental areas in which Indian GAAP • Financial instruments with regard to
Conversion is much more than a technical exceptions to the definition of financial
(IGAAP) differs from IFRS are listed below :
accounting issue. IFRS may significantly liabilities
affect the day-to-day operations of any • Focus on substance over form
company and may even impact the • Employee benefits in recognition of
• Focus on risks and rewards
reported profitability of the business actuarial gains and losses.
itself. Conversion represents a one-time • Present value and fair value concepts
The participants also briefly discussed
opportunity to comprehensively re-assess • Estimates the new exposure drafts released on the
financial reporting and take ‘clean- Ind-AS.
• Extraordinary versus exceptional
slate’ approach to financial policies and
processes. • Restatement Ind-AS and Internal Audit
Understanding IFRS and their implications Internal audit functions can serve as a
is a business imperative for companies. resource for the following:

Board / Audit Committee

• Assist in planning and scoping the
transition project.
• Ensure that all aspects (people,
processes, systems and operations) are
addressed.
• Review diagnostic questionnaires or
summaries prepared.

12 PwC
• Ensure all significant constituencies Integrate change
participate in the process. • Monitor implemented process or system
• Monitor progress. changes.
• Participate in report to the board, audit • Ensure process and control changes are
committee or stakeholders. embedded in organization.
• Ensure contractual agreements/
Finance Function
financial covenants reflect the new basis
• Review the project governance structure of accounting.
or related responsibilities.
• Review revised Sarbanes Oxley (SOX)
• Monitor completion of detailed scope, based on process or systems
component evaluation. changes.
• Review management assessment • Monitor SOX testing of new control
of alternative policies or the issue- environment.
evaluation process.
• Monitor progress and report to
• Monitor plan for training or knowledge stakeholders.
transfer.
• Review prioritized plan for process or
system changes.
• Monitor plan for dual reporting periods.
• Review controls over initial IFRS
conversion.
• Monitor progress and report to
stakeholders.

The Journey 13
Tax function framework:
Direct tax and Internal Audit
Tenth Round Table Conference - 2 December 2011

Overview Key Pointers There was a consensus among participants

on the key drivers for improved tax
With the increasing complexities and The discussion was structured around key
management. These include:
demands for better performance, themes and the insights from the discussion
there is growing need for improved are summarized below: • Technology
tax management. The government has • Communication
gradually reduced corporate tax rates. The Why tax needs managing?
emphasis is now shifting towards enforcing • Structure of tax function
With the prevailing fast-paced and
compliance and expanding the tax base, ever-changing business and legislative • Leadership
with e-governance and digitization gaining environment, it has become increasingly • Controls or risk management
importance. Taxation is also used as a important for companies to effectively
tool to promote investments in identified manage their tax affairs. Keeping in mind • Strategic tax plan
industry sectors, thereby spurring overall the severe risk to reputation, navigating the • Process
economic growth. As such, understanding tax labyrinth requires skill, foresight and
the impact of developments in tax and • Data
effective management of scarce resources.
regulatory aspects and strategically using • People
them to the benefit of business activities is What causes tax risks?
becoming increasingly important. • Trends in Tax
The experience among the participants
Active changes to the structure and rules
suggests that error of judgment, error in
around collection and dispersal of direct
implementation and failure to monitor pose
taxes have been proposed in the form
multiple levels of operational, reputational,
of the Direct Taxes Code (DTC). The
financial and compliance risks.
aim is to eliminate distortions in the tax
How do we manage tax risks? structure, introduce moderate levels of
taxation, expand the tax base, improve
Leading companies carry out assessments tax compliance, simplify the language and
of their tax planning, tax compliance and lower tax litigations. The code incorporates
accounting functions to determine their a prescriptive approach, acting upon
‘As-Is’ state and use the same to improve established judicial precedents.
their management of risks within these
functions.

14 PwC
Beyond this, there is an increased level of
scrutiny upon cross-border transactions,
which impacts advanced pricing
arrangements, unfair treaties and voluntary
information exchange, among other areas.
The approach of the judiciary in India
with regards to taxation is evolving with a
focused approach upon the jurisdictional
limits of the courts and a higher weightage
to public interest while interpreting
legislation and precedents.

Tipping Areas
• Robust strategic plan
• Business driver documentation
• Pre-filing assurance
• Managing multiple financial reporting
Tripping Areas
and their alignment
• Disconnect between accounting and tax
• Comprehensive withholding tax system
• Multiplicity of claims and challenges
• ERP-based tax management systems
• Analytic assurance on reporting
• Deliberate process to anticipate
• Defense docket quality
• Related party reviews
• Contracting term
• Due diligence on deals
• Restructuring transactions
• Inadequacy of disclosure

The Journey 15
Audit committee Effectiveness:
What works best
Tenth Round Table Conference - 2 December 2011

Overview Key Pointers Corporate culture – The soul

In 2011, PwC and the IIA Research • How effective is the tone at the top?
Financial reporting and Disclosures
Foundation conducted a survey of leading • Is there sufficient monitoring of
practices encountered by audit committee • Invest the time to understand the
management override of controls?
chairs. business, supply chain, distribution
channels and visit company facilities • Is there sufficient monitoring of
The survey was conducted in 13 countries management override of controls?
including India and included interviews • Understand critical accounting policies
with audit committee chairs, corporate and key accounting estimates Oversight of management and
governance thought leaders and heads of • Understand other financial and related internal audit
internal audit. information being report – e.g., in • Reach consensus on what role internal
Insights from the survey report were Management’s Discussion and Analysis audit should play to provide maximum
appreciated by participants. Participants value - recognizing that management
identified with the audit committee leading Risk management and internal
may have different objectives than the
practices and agreed that these were quite controls
audit committee
relevant for India as well. • Understand and maintain skepticism for
• Ensure internal audit is empowered
key areas of greatest fraud risk for the
throughout the organization to perform
company
its role
• Clearly define the audit committee’s risk
• Insist on effective internal audit
responsibility relative to the entire board
reporting, at the right level of detail
Culture and Compliance • Make the audit committee’s support for
• Take needed steps to ensure tone at the internal audit visible to management
top is adequate
• Understand whether compliance
programs are effective at promoting
proper conduct and behavior through
the company

16 PwC
Relationship With External Auditors
• Ensure clarity of reporting relationship is
directly with the audit committee
• Engage in selecting new audit partner
(during mandatory partner rotation)
or new audit firm (if current firm not
meeting the needs)
• Evaluate audit fees

Relationship With External Auditors

• Recognize need for greater involvement
in selected situations:
-- If errors are found in previously-issued
financial statements
-- If allegations of fraud or illegal acts
surface

The entire board is

responsible for risk
oversight, but the audit
committee coordinates
the process.
- AC Chair

The Journey 17
Indian Budget 2012 :
Analysis of key proposals
Eleventh Round Table Conference - 23 March 2012

Overview Key Pointers In the words of the Finance Minister,

The focus of the Union Budget 2012 was On the revenue front, the Union Budget The year 2011-12 has
on growth recovery driven by domestic proposes various tax reforms which include
been tough with the Indian
demand; revival of high growth in private working towards an early enactment of the
investment; addressing supply bottlenecks DTC Bill, finalizing the model legislation economy reporting a growth
in agriculture, energy and transport for centre and state GST, proposals to of 6.9%. This is a significant
sectors; tackling problems of malnutrition, increase the contribution of service tax decline as compared to past few
black money and corruption; and and the introduction of the General Anti
implementing decisions to improve delivery Avoidance Rule (GAAR) to avoid counter-
years. Despite the slow down,
systems, governance and transparency. aggressive tax. driven largely by the uncertain
The budget sought to address structural global economic scenario,
Tax Proposals
issues as well as supply-side constraints India remains among the
in the economy. In the past few years, an Participants generally expressed a concern
frontrunners, globally, in any
increased subsidy burden has been the that internal audit functions often do not
major reason for the fiscal imbalance. For really understand the specific impact of the cross-country comparison.
2012-13, the Endeavour of the government budget proposals on their businesses. Most Numerous indicators suggest
is to restrict the expenditure of the central CAEs agreed that the budget is read at a that the economy is turning
subsidies to below 2% of the GDP and bring macro level and that audit teams need to go
back and re-examine if their audit plan or
around as core sectors as well
down the fiscal deficit to 5.1 %.
the focus of certain audits need to undergo as manufacturing show signs
a change. of recovery. India’s GDP
growth in 2012-13 is expected
to be 7.6 % approximately.

18 PwC
Tax Proposals Domestic Tax
The following aspects of the 2012 Budget • Premium in excess of defined FMV to be
were discussed briefly: treated as income
• Widening of the income tax base • Return filing by persons having assets
outside India
• Tax incentives to select infrastructure
sectors • TDS on transfer of immovable property
• Increase in Indirect tax rates and its • Transfer Pricing for domestic
ambit transactions
• Retrospective amendments generated Key Legislative Changes
a fair amount of interest among
participants. Overall, there have been Key legislative changes proposed in the
82 retrospective amendments and 62 union budget :
prospective amendments adding up to • Negative List Concept for taxation of
144 amendments, which is highest since services introduced
Union Budget 2007.
• Negative List Concept for taxation of
• Tax avoidance proposals: services introduced
• International tax
• General anti-avoidance rules
• Source rule of taxation expanded
• Stringent tests for treaty benefit While presenting the Budget, the Finance Minister mentioned
• White paper on black money that for the Indian economy, 2011-12 was a year of recovery
interrupted. The actual results for the year turned out to be
below expectations on account of the global economic downturn
as well as the domestic slowdown. Therefore, there was a need
for fiscal discipline, new measures to levy and collect taxes as
well as providing for incentives for certain sectors.

The Journey 19
Companies Bill:
Challenges and Opportunities
Eleventh Round Table Conference - 23 March 2012

Overview
After over five decades, the Companies
Bill is being overhauled, with the aim of
addressing crucial issues of corporate
governance.
The bill, which will substitute the
Companies Act, 1956 and is expected to
become a law in 2012, envisages several
forward-looking steps.
The CAEs were appreciative of most of
the proposed changes, and believed these
to be a step in the right direction for
corporate India. However, there were some
apprehensions around the practicality
of some of the proposals such as auditor
rotation.

20 PwC
Key Pointers Some novel concepts
The new bill proposes amendment and • Key Managerial Personnel & Officer in
reform in a number of areas these include default
the following: • One Person Company & Dormant
Company
Corporate Governance & Social
Reforms • Small & Associate Companies
• Board of Directors • Class Action Suits
• Corporate Social Responsibility • Registered Valuer
• Rotation of Auditors
• Internal Audit & Audit Committee
• Statutory Compliance Reporting
• Insider Trading
• Consolidation of Financial Accounts

Liberalization in Procedures
• Related Party Transactions
• Electronic Maintenance of Records
• Mergers & Acquisitions
• Managerial Remuneration
• Increase in ceiling of members in
associations

The Journey 21
Aligning Internal Audit
Are you on the right floor?
Twelfth Round Table Conference – 15 June 2012

Overview In these uncertain times, internal

audit cannot simply react to events. It
Global economic uncertainty is the biggest
must adopt a strategic mindset that is
risk to companies in 2012, according to
responsive to risk and raise the minimum
three-quarters of all the CAEs. Businesses
standard of performance in order to be
are calling for internal auditors to
effective in supporting organizational risk
broaden and deepen their role in helping
management and earn a seat at the table.
them navigate the rapidly changing risk
landscape across a range of risks, including While the CAEs agreed to stakeholder’s
data privacy & security, and regulation & expectations, however they felt that
government policies. availability of the right competency/ skills
as well as the mindset among their teams
For more than 1,500 stakeholders and
continued to be a limiting factor.
CAEs representing 16 industries and
spanning 64 countries, it is apparent that
the role internal audit plays in monitoring
and helping to protect a company from risk
is critical
The study highlighted rising stakeholder
expectations and the role they would like
internal audit to play in risk management
to deliver greater value. It also encapsulates Risk aren’t static.
how leading internal audit organizations
have aligned themselves with these Internal audit must
expectations by expanding the footprint
of risks they cover and delivering deeper be flexible.
insights.

22 PwC
Key Pointers • Does internal audit provide a point of
view to help the business improve its
Some of the themes which the discussions
responses to risk?
hovered around, are listed below:
• How effectively does internal audit
• What are the most critical risks that the
communicate with stakeholders?
organization faces today?
Every company small or big should work
• Do you believe your organization is
towards reaching the next level. The study
better at managing risks than your peer
identifies eight core attributes that lead up
organizations?
to the new floor:
• Within your organization, do you believe
1. Focus on critical risks and issues
that internal audit focuses on the Risks
That Matter (RTM) to your business? 2. Align value proposition with
stakeholders’ expectations
• Do you have a coordinated line of
defense? 3. Match talent model to the value
proposition
• Are you planning projects to assess
sustainability programs in your 4. Engage and manage stakeholder
company? relationships
• Are you prepared to focus on the 5. Enable a client service culture
attribute of excellence? 6. Deliver cost-effective services
Focus Areas 7. Leverage technology efficiently
Given the new risk landscape, there is a 8. Promote quality improvement and
burning need to rise to the new ‘floor’ or innovation
standard. PwC suggests that the internal
auditors should ask themselves the
following questions
• Is the current audit plan well aligned
with the critical risks facing the
organization?

The Journey 23
Discussions on revised Schedule VI
Twelfth Round Table Conference – 15 June 2012

Overview Overall, the CAEs supported the Revised

Schedule VI and it was felt that it is a
The Revised Schedule VI to the Companies
healthy transition on account of the
Act became applicable to companies for
following:
periods beginning 1 April 2011.
• It is a move towards internationalizing
The Revised Schedule VI is not merely
the ‘look’ of the financial statements.
a change in format but is a step towards
enhanced norms for presentation and • The earlier Schedule VI had not kept
disclosure. It includes recommendations pace with accounting standards.
such as classifying every asset and liability • Significant changes including current or
into current and non-current. One of the non-current classification
significant changes is that the applicable
notified accounting standards have now • Increased use of judgment and estimates
been given an overriding status vis-à-vis the • Managing the extent of disclosures and
Revised Schedule VI. ensuring optimum disclosures, neither
The financial statements will now reflect excessive nor too little
the business of the company more closely. The ICAI has issued a Guidance Note on
Hence, the preparers of the financial the Revised Schedule VI to the Companies
statements will need to have an in-depth Act, 1956, which provides guidance in the
knowledge of the business of the company, preparation and presentation of financial
and also need to exercise professional statements of companies in accordance
judgment. with various aspects of the Revised
Schedule VI.
However, many CAEs were of the view that
their teams needed to spend more time on
studying the Revised Schedule VI in detail.

24 PwC
Key Pointers
• Internal audit can take the lead and
run awareness and/ or training courses
for both, finance as well as non-finance
personnel across the organization.
• Areas or processes which are more
impacted by the Revised Schedule VI can
be factored into the annual audit plan, or
if these are already factored in then the
focus on these aspects can be increased.
• In initial periods, internal audit can
undertake a pre-audit review of the
financial statements prior to the external
audit.
Internal audit can also help in realigning
existing business processes (including
process documentation) so that these are
consistent with the Revised Schedule VI

The Journey 25
List of Attendees in the Round Table
Conferences

Participants Group/Organisation* Participants Group/Organisation*

Amit Roy NIIT Rahul Katiyar American Towers

Anuj Mathur Uninor Rajesh Aysola Ranbaxy Laboratories

Arup Chakraborty Cairn India Rajesh Handa HT Media

Arvind Vats Jubilant Foodworks Ravi Mohan Bharti Infratel

D D Goyal Maruti Sanjay Baweja Emmar MGF

Dharmendra Panwar Max Hospitals Sanjeev Singhal Spice Global

Dinesh K Taneja VE Commercial Vehicles Sanjeev Sood Max Life Insurance

Girraj Bansal Dabur India Shamini Ramalingam Bharti Airtel

Harish Dua Lanco Infratech Sunil Kumar Ranbaxy Laboratories

Jagdish Kapoor Videocon Mobile services Sunil Putty EXL Services

Jagdish Kumar Singla Nestlé India T Kumar Times Of India

John Mathew Coke Tanu Acharya Genpact

Joydeb Chatterjee SRF Vineet Mittal Indigo

Jyoti Ruparel Genpact Vinod Rao Indus Towers

Nupur Ray Chaudhuri Schneider Electric India

As on date of the round table meeting

26 PwC
About PwC India

PricewaterhouseCoopers Pvt Ltd is a

leading professional services organisation
in India. We offer a comprehensive
portfolio of Advisory and Tax & Regulatory
services; each, in turn, presents a basket
of finely defined deliverables, helping
organisations and individuals create the
value they’re looking for. We’re a member
of the global PwC Network.
Providing organisations with the advice
they need, wherever they may be
located, PwC India’s highly qualified and
experienced professionals, who have
sound knowledge of the Indian business
environment, listen to different points
of view to help organisations solve their
business issues and identify and maximise
the opportunities they seek. Their industry
specialisation allows them to help create
customised solutions for their clients.
We are located in Ahmedabad, Bangalore,
Bhubaneshwar, Chennai, Delhi NCR,
Hyderabad, Kolkata, Mumbai and Pune.
Tell us what matters to you and find out
more by visiting us at www.pwc.com/in.
 Scan the QR code below
for more information on
RAS India

pwc.com/india
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information
contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of
the information contained in this publication, and, to the extent permitted by law, PwCPL, its members, employees and agents accept no liability, and disclaim all responsibility,
for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Without prior
permission of PwCPL, this publication may not be quoted in whole or in part or otherwise referred to in any documents.

© 2012 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in
India), which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.

NJ 388 - September 2012 TheJourney2.indd

Designed by: PwC Brand and Communications, India