Incorporating Internal Financial Controls Over Financial Reporting Empirically- Series 7–Budget & MIS

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Incorporating Internal Financial Controls Over
Financial Reporting Empirically- Series 7Budget
MIS
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• As I already stated in my introductory part of
  this topic, any process will be parted into
  static and strategic meaning thereby one which is
  in as it is form and the other requires
  professional skepticism. Above that, static facts
  w.r.t. terminologies are also tuned here. Let us
  sail beyond statutory sections sight u/s 134,
  143,177 of Companies Act, 2013 by carving into
  crux of HR worker staff process. Draft design
  depicted as
• Radical round
• Building base
• Strata static sphere
• Review rack
• Holistic Heed

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• Radical round
• Boosting buzz of the boss to give data in their
  own bias basis and whooping wish list of xyz
  department to spend significant sight beyond
  sanctioned are the starting stands which ink its
  insights to the importance of process- planning,
  budgeting and management information system
  (MIS). This finds its way in almost all other
  processes of IFC as it becomes the beginning
  base. Incepts at planning stage with execution
  and participation of all stakeholders after
  aligning system sync mixed by monitoring it at
  regular intervals with outcome of preventive or
  corrective call from data derived to make
  decision via MIS.
• Building Base
• It starts with the format required to give
  birds eye view to management and how data will
  be filled into it to derive meaningful
  information. Budget basics have standard
  component like projections, growth percentage,
  external factors of inflation, market movement,
  any aspect affecting business model and its
  expansion, actual inputs to estimates used
  analysis, range of a period, trend considered,
  etc. Secondly, bifurcation of budget must be
  demarcated. Sales, capex, labor, production,
  financial, marketing, HR or under umbrella of
  master, finance, operating and overheads, it
  could be any combinations. This gives weightage
  of certain departments in direction to the
  business environment in which company
  operates.

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• Brainstorming amongst departments is the
  breakthrough. If it is not the 1st year of the
  company to conduct, design, draft, or test IFC, a
  glance at its    past trends posts the pic
  precisely.E.g., A situation where it is
  observed that marketing expenses have been
  running in ad-hoc approval mode for the past 2
  years. Possibilities could be (a) Input given
  by the team at planning stage needs to be
  reconsidered with realistic review (b) Does the
  time of 2 years include exceptional scenarios?
  A pandemic, Govt restrictions like hoarding ban
  in market contributing major revenue and cost
  incurred likely to be sunk cost due to vernacular
  language used in marketing materials. (c) Less
  allocation to the marketing department despite
  budgeted outflow factored at 0.(1234..) less.
  (d) top management movement in the said
  department may impact strategies to support the
  budgeted figures. Thus, the importance of
  cross-sectional stakeholders to seek in- depth
  view beyond figures and trends. MIS- a format
  with frequency set to mingle matching concept
  clarity for setting tone at the top. Here also it
  is the industry under review which defines
  scope of budgeting and MIS. E.g. for a bank, MIS
  needs to be prepared by a semi-skilled staff due
  to sensitivity of information to peers while for
  any FMCG sector a dedicated team from preparation
  stage at skilled staff is sourced. Thus, building
  base begins with brainstorming and bandwidths
  till board meeting.

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• Strata-static sphere
• Consists of
• SOP
• Static seven
• SOP
• SOP for this module mostly talks about synergy
  among departments to draw budget. A flow
  distinguishing share of each part of organization
  in terms of allocation. Internal resources and
  factors to be referred to and external
  environment inclusion at in-prompt phase or
  prolonged are to be planned.
• 2. Static seven
• Following seven points which are statistically
  significant
• I. List of type of budget and its share in
  master budget.
• II. Relevant stakeholders inclusion and person
  responsible to provide inputs till approval end.
• III. Pre and post approvals for excess/deficit
  funds aligned to SOD/DOA matrix.
• IV. Statutory compliance corner in terms of
  approved board meetings and applicable framework
  requirements to be refereed to.
• V. Back up of data as part of business continuity
  plan.
• VI. Utilization of budget for which it is set out
  i.e., cross utilization of amounts. Inter
  transfers and related party portions to be
  precisely looked at.
• VII. Cash /fund positions and their separate or
  integral SOP to be taken at substantive
  sight.

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• Review Rack
• Rest assured it will reviewed! Is this statement
  restricted only in cases where actuals exceeded
  budget? Yes, its a must measure as part of
  corrective action, but review rack range
  represents round table reactions. There needs to
  be frequency set for review and action plan
  documented for variance analysis. System
  controls, the role of IT in implanting budget
  needs to be tested.
• A scenario of system controls from testing
  outcome basis.
• Effective System is managed in such a way that
  no component is unlinked to enter the amount more
  than approved budget except via IT ticket in case
  of revised approvals, which is again aligned to
  approvals at par with SOD matrix.
• Partially effective
• Components are so mammoth for an industry that
  not entire module works on preventive path. Capex
  can be configured in system as it has limited
  components to cater the needs while for opex
  system cannot be mapped to miniscule level.
  However, review rack is so strong that opex is
  aligned to approved figures. So, capex IT
  controls are strong while opex system is used
  merely to abstract reports.
• Ineffective No role of IT in budget and
  controlling. Only used to abstract data. There
  exists a deficiency on account of system sync.
• Review rack is not restricted to re-work, it
  considers scenario of route which is adopted to
  analyze outcomes of budgeted vs actual vs
  external or ad-hoc situations with in-prompt,
  preventive and corrective path perceived.
  

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• Holistic Heed Budget and MIS being the best tools
  of decision making takes process point to
  pervasive view. Considerable time is spent to
  frame the budget in line with the vision of the
  company. There are instances inclined for
  mid-size or big companies that budget partakes in
  one of key performance indicators (KPI). Holistic
  heed to be paid as process owners are mostly
  those charge with governance.Tags Companies
  Act, Companies Act 2013, Internal AuditRead
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