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In today’s highly regulated business environment, effective internal controls are essential to building strong corporate governance, transparency and accountability.
Around the world, regulators and organisations are recognising the importance of structured control frameworks, especially those that govern financial reporting. In Indian context, Internal Financial Controls (IFC) refer to the systems, policies, and procedures that ensure a company's operations are efficient, compliant, and secure. Mandated under the Companies Act, 2013, IFCs play a critical role in safeguarding assets, preventing fraud and errors, ensuring adherence to internal policies, and enabling the accurate and timely preparation of financial statements.
At Grant Thornton Bharat, we empower organisations to strengthen their IFC frameworks with confidence. Our industry-leading approach combines regulatory insight, practical experience, and a deep understanding of the Indian business landscape to deliver tailored IFC solutions that go beyond compliance, driving operational excellence and long-term value.
Implementing and maintaining effective IFC frameworks is essential for:
Strengthens accountability and transparency in financial reporting.
Helps detect and mitigate financial misstatements and fraudulent activities.
Builds stakeholder trust in the financial integrity of the company.
Helps avoid penalties and legal consequences for non-compliance.
Statutory auditors are mandated to report on the adequacy and operating effectiveness of a company’s IFC systems.
The applicability of IFC requirements in India depends on the type and size of the company:
| Types of companies | |||
|---|---|---|---|
| Statutory requirements | Listed companies | Specified class of companies* | Private companies [except Small companies and one-person companies (OPCs)]** |
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Director's Responsibility Statement (Section 134)
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Rule 8 of the Companies (Accounts) Rules, 2014
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Audit Committee (Section 177)
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Statutory Auditor Report (Section 143)
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*Specified class of companies includes:
**These companies will be exempted from IFC applicability only if they have not defaulted in filing their financial statements under Section 137 of the Companies Act, 2013, or annual returns under Section 92 of the Companies Act, 2013, with the Registrar.
A small company in India is defined under Section 2(85) of the Companies Act, 2013, as a private company that has a paid-up share capital of up to INR 4 crore (previously INR 2 crore) and a turnover of up to INR 40 crore (previously INR 20 crore). A company cannot be classified as a small company if it is a public company, a holding or subsidiary company, a company registered under Section 8 (not-for-profit organisation), or a company governed by any special act.
OPC is a type of business structure introduced under Section 2(62) of the Companies Act, 2013. It allows a single individual to incorporate a company with limited liability, offering the benefits of a corporate entity while maintaining simplicity in compliance.
***Except private companies with:
We partner with businesses to evaluate existing IFC frameworks, identify gaps, and implement targeted solutions for improved regulatory alignment. Our IFC solutions strengthen financial governance, reinforce risk controls, and streamline IFC documentation and testing, ensuring both compliance and operational efficiency.
Our comprehensive services include:
A proven track record in delivering high-quality IFC solutions across industries.
We design frameworks that fit your unique business and regulatory environment.
We work closely with your teams to embed sustainable practices.
From audit to disclosure, explore IFC requirements in India. Download now to learn how Grant Thornton Bharat can help your business stay compliant.
