India has the 3rd largest startup ecosystem in the world which is witnessing continuous YoY
growth. These Start-up usually have unique different business models which are very dynamic.
The Promoters of these Start-Ups who are usually from younger generation understands the
importance of processes and systems for growth of their companies. They require support in
ensuring that their companies are compliant to the applicable regulations.
COMMON AREAS OF IMPLEMENTING INTERNAL CONTROLS
Some of the critical areas where Start-Ups need to ensure proper internal Controls are:
- Compliances like registration, TDS, GST, Return filing
- Procurement of goods, services and capital assets
- Study the inherent risk of fraud or double payment
- Process of reconciliation of revenue being collected from different mode of payments
i.e. Cheque/NEFT/Online/Discount coupons/Channel partner etc.
- Review the controls in the operations of business which impact the accounting and
- Review of payroll process
- Review the MIS and other metrics
- Defining simple systems in each of the critical functions for smooth operations
- Cost Optimization
- IT Risks
Promoters or investors rely on internal audit to provide assessments and assurance around the
effectiveness of controls and company processes, while also providing support in a diverse
array of risk and business process improvement areas. As data is becoming very critical asset,
Startup entrepreneurs should implement measures for protecting their companies’
management and financial data. Internal controls help organizations to achieve their business
objectives by providing insights on potential systems and controls to be implemented for
attaining the same. Many startups fail to understand the significance of internal controls until they start making losses or face non-compliance penalties. Creating internal controls goes a long way in ensuring its success.
APPROACH OF INTERNAL AUDIT FOR START-UPS
Some steps where Internal Auditors can help Start-Ups to implement internal controls:
1. Risk Assessment to apprise with and deal with all the risks that your startup faces
2. Reviewing existing policies and controls to determine whether they adequately address
3. Create Simple Flow Charts and Processes for each function of the company mitigating
above risks. This includes clearly defined roles and responsibilities and timelines for each
4. Train employees to understand these processes and their use and engage them to
5. Ensuring System Access and Security by looking at IT general controls
6. Establish a Culture of Record-Keeping
7. Monitoring of controls on periodic basis
Hence, Internal Auditors acts as a Partner with Start-Ups for their growth. They go a long way
in making the startup thrive besides ensuring compliance with regulations.
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DPNC Global LLP is a full service consulting firm providing multi-disciplinary services to clients ranging from MNCs, Indian Corporates from across industries to Family Offices and UHNIs, both in and outside India.
Our Risk Advisory Services (RAS) team offers solutions to help organizations and their management to effectively balance risk management, governance and compliance while moving towards their short-term and long-term strategic goals. Our team comprises a group of qualified and experienced professionals with in-depth knowledge and specialization in risk advisory services including for conducting Internal Audits, developing Standard Operating Procedures etc. We leverage our knowledge of industry best practices and domains across organizations of all sizes and sectors to streamline and develop systems, processes & solutions that are tailored to be suitable for our clients. To know more about our services in Risk Advisory Services, visit https://dpncglobal.com/risk-advisory/
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