Overview of Internal Financial Control over

Transcript:Overview of Internal Financial Control over:
Overview of Internal Financial Control over Financial Reporting and IRAC Norms by A Gopalakrishnan, B.Sc., FCA, CISA, DISA One Day CPE Seminar Friday, 19th March, 2021 9.00 AM to 04.30 PM Organized by Ernakulam Branch of SIRC of ICAI Framework Introduction Contents Overview of IRAC Norms Overview of Internal Financial Controls over Financial Reporting Conclusion OVERVIEW OF IRAC NORMS Introduction - Regulatory (RBI) Outlook Emerging views and approach of Regulator : Comments of RBI Governor after the monetary policy announcement RBI undertaking deep dive assessment of the true state of NPAs in each of the banks and have a sense of the overall situation RBI collecting data from various banks with regard to the size of individual stress and the kind of NPAs in all banks RBI has deepened its supervision and is making an assessment of the true state of non-performing assets (NPA) in all banks Contd… The Economic Survey 2021: Called for an Asset Quality Review (AQR) for banks after the COVID-19-related forbearance is removed Forbearance represents emergency medicine that should be discontinued at the first opportunity when the economy exhibits recovery, not a staple diet that gets continued for years. Financial Stability Report (FSR) released by the RBI in January 2021: Under the baseline stress scenario, gross non-performing assets (GNPAs) of all banks may rise to a 22 years high of 13.5 per cent by September 2021, from 7.5 per cent in September 2020 Contd… RBI is collecting data from various banks with regard to the size of individual stress and the kind of NPAs in all banks RBI harping on banks to make provisions proactively and many banks have done made them anticipating higher NPAs A positive development in the sense that there is a wide realisation in the banking sector that they need to provide adequately for the build-up of stress RBI constantly monitoring the impact of the standstill which is there on asset classification and the COVID-19 related resolution framework All these data flowing into RBI on a daily basis will have a clearer picture as economy move ahead Critical Issues Announcement in the Monetary Policy of RBI released in Dec 2020 - Asset (advance) quality review by the RBI. Emphasis of RBI to delve deep into the asset portfolio of the banks – Reminder to the profession Focus of the audit is to ensure compliance with IRAC Norms COVID -19 Impact – Developments