Internal Audit Policy

Policies and Manuals: Internal Audit Policy

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Document Control Page

Document Name : Digamber Capfin Limited – Internal Audit Policy

Document Owner : Digamber Capfin Limited

Review By : Board of Directors/ Executive Committee
Approved By : Board of Directors

Classification : Internal Use Only

Distribution List : Digamber Capfin Limited

Revision History
Date Status
25.01.2020 Approved
05.09.2020 Reviewed by Board of Directors
30.04.2021 Reviewed by Executive Committee
24.08.2021 Reviewed by Board of Directors
26.05.2022 Reviewed by Board of Directors
15.06.2022 Reviewed by Executive Committee
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Table of Contents

PREAMBLE ............................................................................................................................................ 4

OBJECTIVE ............................................................................................................................................ 4

SCOPE..................................................................................................................................................... 4

AUDIT UNIVERSE ................................................................................................................................. 5

AUDIT PLAN .......................................................................................................................................... 5

AUDIT SAMPLING ................................................................................................................................ 5

AUDIT REPORTING .............................................................................................................................. 6

DOCUMENTATION................................................................................................................................ 6

ORGANIZATION .................................................................................................................................... 6

MANPOWER .......................................................................................................................................... 7

CODE OF ETHICS .................................................................................................................................. 7

ACCESS TO INFORMATION ................................................................................................................. 7

AUDITEE RESPONSIBILITIES ............................................................................................................. 8

REVIEW OF THE AUDIT POLICY ........................................................................................................ 8

POLICY REPEALABLE .......................................................................................................................... 8

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PREAMBLE

Being one of the leading company in the micro finance sector, and to confirm to
International best practices, it is appropriate that Digamber Capfin Limited have a
documented audit policy approved by the board of directors as a part of their oversight
function.

Digamber Capfin Limited considers Internal Auditing as an independent and objective

consulting activity designed to add value and improve the company’s operations. It assists
the company in accomplishing its objectives by bringing a systematic and disciplined
approach to evaluate and improve the effectiveness of the Company’s risk management,
control and governance processes. The responsibilities and area of Internal Audit
functions are defined by this policy.

The procedure of audit needs to be documented for the different streams of activity Via
branch operations, regional offices and other establishments, HO departments,
Information system etc. separate Audit procedures will be structured for all audit streams
to facilitate the audit activity.

OBJECTIVE

The Objectives of Internal Auditing are:

a) To ascertain compliance with statutory and regulatory requirements;
b) To ascertain compliance with process & policies laid down by the company;
c) To advise the management of any deficiencies in processes, procedures, and
functions;
d) To determine the integrity, security, and controls in the information system are at
acceptable standards; and
e) To identify deficiencies in the internal control system and recommend procedures to
plug the control gaps.

SCOPE

(I) The scope of internal auditing encompasses the examination and evaluation of the
Adequacy and effectiveness of the Internal Control System and the quality of
Performance in carrying out assigned responsibilities at the organizational,
Departmental and functional level.

It includes:

a) Reviewing the reliability and integrity of financial and operating information;

b) Assessing compliance with policies, plans, and procedures;
c) Assessing compliance with laws and regulations;
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d) Reviewing the means of safeguarding assets and verifying the existence of such
Assets;
e) Verifying quality of Assets;
f) Reviewing and appraising the economy and efficiency with which resources
including IT Resources are employed;
g) Reviewing established systems of internal control to ascertain whether they are
functioning as designed;
h) Monitoring and evaluating the effectiveness of the company’s operational risk
management processes;
i) Examining and reporting on the adequacy of internal controls for all new or
significantly modified information systems.
j) Investigating and reporting on violations of policies and procedures, errors, fraud
or misuses of company assets.
k) Reviewing specific operations, programs, functions or activities at the request of
the Audit Committee or management, as appropriate.

(II) The Internal Audit Department will provide advice and assistance to the
management, when requested, by:

a) Serving as a consulting resource for the review of policies and procedures,

Financial and administrative systems, organizational structures, and other
related administrative activities;

b) Serving as a consulting resource for the development of control procedures for

New or significantly modified functional areas and computer-based financial
and Management information systems.

AUDIT UNIVERSE

Audit universe includes all the activities, functions and departments of the company.

AUDIT PLAN

Frequency of audit of an activity/ function should be determined based on the risk

Perception. However, all activities, functions and unites of the company will be audited at
least once a year.

AUDIT SAMPLING

a) The internal auditor may perform sample verification where 100% verification is not
warranted based on the risk perception;
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b) The internal auditor should design and select an audit sample, perform audit
Procedures thereon, and evaluate sample results so as to provide sufficient
appropriate audit evidence to meet the objectives of the internal audit engagement;

c) While designing an audit sample, the internal auditor shall consider the specific audit
objectives, the population from which the internal auditor wishes to sample, and the
sample size;

d) The internal auditor shall select sample items in such a way that the sample can be
expected to be representative of the population. This requires that all items or
sampling units in the population have an opportunity of being selected;

AUDIT REPORTING

a) An audit report shall be prepared by the Auditor following the conclusion of each
audit. The report will be finalized after discussion with the head of
department/activity under review;
b) The response should include a time-frame for anticipated completion of the action to
be taken for rectifiable irregularities and an explanation for any recommendations
that cannot be accepted;
c) For non-rectifiable irregularities, appropriate action will be taken within the time
prescribed by the operational guidelines. or permission for maintaining status quo
obtained from appropriate authority;
d) The distribution of the report, objection of the comments, determination of the
adequacy thereof and taking up the matter again if needed will be carried out by
internal audit department;
e) The Internal Audit department will report findings to the head of department
f) Head of the Internal Audit department shall report to the audit committee on a
frequency laid down by the board.
g) Observations found in Internal Audit Department will be placed in the Audit
committee at quarterly basis.

DOCUMENTATION

a) The auditor shall prepare audit documentation on the basis of which he / she reached
his/her Conclusions;
b) The documents may be kept in paper form or in electronic form. However, as far as
possible electronic documentation methods shall be followed.
c) The retention period of audit documents will be laid out in the respective manual.
The documentation will be recalled in case of any dispute on the audit findings.

ORGANIZATION
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a) The ‘Head – Internal Audit’ shall report administratively to the CFO-WTD and
functionally to the Audit Committee of the Board;

b) The Internal Audit department shall be independent and objective in providing its
services.

MANPOWER

a) Internal Audit department shall be adequately staffed with competent auditors;

b) The auditors will generally be employees on the rolls of the company;

c) The company may outsource some part of audit to experienced professionals

whenever needed.

CODE OF ETHICS

a) Internal Audit staff members are responsible for conducting themselves so that their
integrity, objectivity, confidentiality, and competency are not open to question;
b) Internal Auditors shall possess the educational background, qualifications and
competencies commensurate with their level of responsibility with providing
assurance and consulting services to the company;
c) Exercise objectivity, and diligence in the performance of their duties and
responsibilities;
d) Exhibit loyalty in all matters pertaining to the affairs of the company and not be a
party to illegal or improper activity;
e) Refrain from entering into any activity which may be in conflict with the interest of
the company or which would prejudice their ability to objectively carry out their
duties;
f) Be prudent in the use of information acquired in the course of their duties and not
use confidential information for any personal gain or in a manner that knowingly
would be detrimental to the interest of the company;
g) Use reasonable care to obtain sufficient factual evidence to support the conclusions
drawn;
h) Reveal such material facts known to them which, if not revealed, could distort the
reported results of the audit and
i) Continue to strive for improvement in the proficiency and effectiveness of their
service.

ACCESS TO INFORMATION

a) Internal Audit has the authority to audit all functions of the company and shall have
full and complete access to all information, program, database, records, facilities and
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personnel relevant to the performance of an audit;

b) Documents and information given to internal auditors during a review will be

handled consistent with company policy and in the same manner as the employees
are normally accountable for them.

AUDITEE RESPONSIBILITIES

a) The division/department or activity under review is to provide full cooperation to

the Internal Audit Department;

b) In some cases, there may be occasions when audit is planned without prior
intimation. The auditee unit shall furnish information to the auditor whenever
required;

c) Head of the auditee department is responsible for developing action plans and
implementing the recommendations contained in the audit report or alternatives that
meet the objectives of the recommendations.

REVIEW OF THE AUDIT POLICY

a) The Internal Audit policy shall be reviewed every year;

b) The Board of Directors is responsible for the review and modification of the Internal
Audit policy based on the recommendations of Audit committee.

POLICY REPEALABLE

a) This Policy constitutes the entire document in relation to its subject matter. In the
event that any term, condition or provision of this Policy being held to be a violation
of any Applicable Law, statute or regulation, the same shall be Repealable from the
rest of this Policy and shall be of no force and effect, and this Policy shall remain in
full force and effect as if such term, condition or provision had not originally been
contained in this Policy.
 Digamber Capfin Limited
Address: J 54-55, Anand Moti, Himmat Nagar, Gopalpura,
Tonk Road, Jaipur-302018, Rajasthan.