The Companies Act 2013 ushers in a new era of corporate governance and transparency in the Indian corporate sector. Also, the Securities and Exchange Board of India (SEBI) with the objective to align its provisions to the recently notified provisions of the Companies Act, 2013 has specifically reviewed clause 49 of the Listing Agreement, to adopt leading industry practices on corporate governance and to make the corporate governance framework more effective. With requirements of these norms warranting organizations to provide positive assurance to Board of Directors and Audit Committees on - adequacy of internal financial controls; effective risk management processes; Anti-fraud controls and effective legal compliance framework - the Internal Auditor would need to review and re-define its role and fulfill its role as an important vehicle and an enabler of good corporate governance. New Internal Audit Charter needs to be redrawn to help shift the purpose of internal audit to create value and expand beyond the traditional role and achieve its full potential.
This report, discusses four themes which would now form part of the new Internal Audit Charter to support the organization and the stakeholders meet the expectations of the new Companies Act 2013. We also build what we call the “New Performance Continuum” for the Chief Audit Executive (CAE) in the wake of the changed environment and also discuss some of the steps and procedures which should find place in new audit plans, roles and responsibilities for the Internal Auditor to address these changes.