INTRODUCTION:

Internal control is a technique used by managers/Top Mangement to help an organization achieve these objectives. Internal Control Process of Patanjali Ayurved Limited is to provide reasonable assurance that Company achieves its objectives in the following categories:

• Reliability of financial reporting
• Effectiveness and efficiency of operations,
• Compliance with applicable laws and regulations.

INTERNAL CONTROL – METHODS

• Authorization of transactions – review of particular transactions by an appropriate person.
• Segregation of duties – separating authorization, custody, and record keeping roles to prevent fraud or error by one person.
• Retention of records – maintaining documentation to substantiate transactions.
• Supervision or monitoring of operations – observation or review of ongoing operational activity.
• Physical safeguards – usage of cameras, locks, physical barriers, etc. to protect property.
• Top-level reviews-analysis of actual results versus organizational goals or plans, periodic and regular operational reviews, metrics, and other key performance indicators (KPIs).
• IT general controls – Controls related to: a) Security, to ensure access to systems and data is restricted to authorized personnel, such as usage of passwords and review of access logs; and b) Change management, to ensure program code is properly controlled.
• Setting budgets to establish the criteria for expected state of affairs of the Company.
• Determining the risks associated with the operations and activities of the Company and taking effective measures to control the same.
• Complying with the Risk Management Policy, Policy for Prevention of Fraud, Related Party Transaction Policy so as to ensure the effective control.

RESPONSIBILITY OF MANAGEMENT

• Planning
• Organizing
• Directing
• Controlling

FRAMEWORK

• The Board recognises its responsibilities to present a fair, balanced and understandable assessment of Company’s Position and prospects. The Board has accountability for reviewing and approving the effectiveness of internal controls operated by the Company, including financial, operations and compliance controls and risk management.

• The Managing Director / Directors of the Company has overall responsibility for designing and implementing effective internal control. More than any other individual, they set the “tone at the top” that affects integrity and ethics and other factors of a positive control environment and for fulfilling this duty they provide leadership and direction to Head of Department.

• Head of Department, in turn, assign responsibility for establishment of more specific internal control policies and procedures to personnel responsible for the department functions.

• Every Employee in an organization has the responsibility for internal control to some extent. All employees produce information used in the internal control system or take other actions needed to affect control. Also, all personnel are responsible for communicating to seniors about the problems in operations, noncompliance with the code of conduct / applicable laws, or other policy violations or illegal actions. 

ADDITIONAL MEASURES

1.    Audit committee

The audit committee, performs the following functions :

• Review and monitor the auditor’s independence and performance, and effectiveness of audit process;
• Examination of the financial statement and the auditors’ report thereon;

(iii)       Approval or any subsequent modification of transactions of the company with related parties;

(iv)       Scrutiny of inter-corporate loans and investments;

(v)        Valuation of undertakings or assets of the company, wherever it is necessary;

(vi)      Evaluation of internal financial controls and risk management systems;

(vii)      Monitoring the end use of funds raised through public offers and related  matters.

Audit Committee is also monitoring the adequacy of the internal controls of the Company.

2. Internal & Statutory Audit

The Internal auditors and statutory auditors of the Company also measure the effectiveness of internal control through their efforts. They assess whether the Methods of controls are properly designed, implemented and working effectively, and make recommendations to the management for improving the Internal Control System. They will provide reasonable assurance that internal controls involved in the financial reporting process are effective, They are required to opine on the internal controls of the company and the reliability of its financial reporting.

IMPLEMENTATION

The Committee may issue guidelines, procedures, formats, reporting mechanism and manuals in supplement and for better implementation of this policy as considered appropriate.

The Committee may Delegate any of its powers to one or more of its members.