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.
The importance of IFC
Implementing and maintaining effective IFC frameworks is essential for:
Corporate governance
Strengthens accountability and transparency in financial reporting.
Fraud and error prevention
Helps detect and mitigate financial misstatements and fraudulent activities.
Investor confidence
Builds stakeholder trust in the financial integrity of the company.
Regulatory compliance
Helps avoid penalties and legal consequences for non-compliance.
Audit reporting
Statutory auditors are mandated to report on the adequacy and operating effectiveness of a company’s IFC systems.
IFC applicability and disclosure requirements in India
The applicability of IFC requirements in India depends on the type and size of the company:
| Types of companies | |||
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| 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:
- Public companies with a paid-up capital of INR 10 crore or more
- Public companies having a turnover of INR 100 crore or more
- Public companies having, in aggregate, outstanding loans, borrowings, debentures, or deposits exceeding INR 50 crore or more
**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:
- Turnover of less than INR 50 crore as per the latest audited financials
- Aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the financial year amounting to less than INR 25 crore
How Grant Thornton Bharat can help
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:
- Conducting walkthroughs, design-level and transaction-level testing for control.
- Designing/updating detailed risk control matrices (RCMs), process narratives, and flowcharts for structured risk management.
- Identifying gaps in financial and operational controls and recommend corrective actions.
- Strengthening corporate governance and regulatory reporting.
- Evaluating internal control effectiveness to prevent fraud and financial misstatements.
- Recommending IT controls to safeguard company’s data.
Why choose Grant Thornton Bharat
Expertise you can trust
A proven track record in delivering high-quality IFC solutions across industries.
Tailored, risk-based approach
We design frameworks that fit your unique business and regulatory environment.
Collaborative partnership
We work closely with your teams to embed sustainable practices.
Internal Financial Controls (IFC) solution
From audit to disclosure, explore IFC requirements in India. Download now to learn how Grant Thornton Bharat can help your business stay compliant.