What are Internal Financial Controls (IFC)?

Internal Financial Controls (IFC) are policies, procedures and control mechanisms designed to ensure accurate financial reporting, safeguard assets, prevent fraud and support regulatory compliance.

Who should implement an IFC framework?

Companies subject to the Companies Act, growing businesses, and organizations preparing for statutory audits or corporate governance reviews should implement a robust IFC framework.

What does Taxlegit's IFC setup service include?

Taxlegit assists with process mapping, risk assessment, Risk Control Matrix preparation, SOP documentation, control implementation, testing and audit readiness.

Why are Internal Financial Controls important?

Effective Internal Financial Controls improve financial reporting accuracy, strengthen governance, reduce operational risks, support compliance and enhance audit preparedness.

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Internal Financial Control Setup for Audit-Readiness

Audit Readiness

Strong checks

Streamlined approvals and accountability

Auditor Confidence

transparency for management and stakeholders

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Why Internal Financial Control Matters

In today’s regulatory environment, Internal Financial Control (IFC) is more than a compliance requirement, it is the backbone of sound financial governance. IFC ensures that a company’s financial reporting is reliable, its assets are safeguarded, and its operations run with integrity. Under Section 134(5)(e) of the Companies Act, 2013, company directors are responsible for establishing and maintaining adequate IFC systems. Meanwhile, under Section 143(3)(i), auditors are required to report on their effectiveness independently during the Internal Financial Control Audit process.

At Taxlegit, we help businesses design, document, and implement robust IFC frameworks that meet audit standards, regulatory requirements, and stakeholder expectations. Our IFC solutions bring structure, discipline, and transparency to financial processes across procurement, sales, HR, payroll, inventory, and accounting functions.Read moreRead less

Industries We Serve

Our Internal Financial Control (IFC) setup services cater to a wide range of industries and business models. Every organization faces different operational risks, so we tailor our approach to suit your specific structure, systems, and compliance needs.

Manufacturing and Trading

Strengthening purchase, production, and inventory controls to ensure accuracy in costing and financial reporting.

IT and Professional Services

Implementing process-level controls for revenue recognition, project billing, and employee expense management.

Startups and Private Limited Companies

Helping emerging businesses build scalable control frameworks that support audits, investor due diligence, and funding rounds.

NGOs and Section 8 Entities

Designing transparent financial control systems for grant management, donor reporting, and compliance with CSR regulations.

Real Estate and Infrastructure

Managing high-value transactions and project-based accounting through robust authorization and monitoring controls

Each IFC engagement is customized to fit your industry risk profile, ERP system (Tally, SAP, Zoho, QuickBooks), and operational complexity.

Our IFC Setup Services

We offer comprehensive IFC implementation services that make your organization audit-ready, compliant, and resilient to financial and operational risks. Our approach ensures that every process is clearly defined, controlled, and aligned with statutory requirements.

Risk and Control Identification

We begin with detailed process walkthroughs across all major business cycles—procurement, sales, payroll, finance, inventory, and more. This helps us identify key risks that may lead to financial misstatements, operational lapses, or compliance issues. Every risk is assessed and mapped to the relevant control.Read moreRead less

Control Design and Documentation

Our experts design practical preventive and detective controls tailored to your organization’s workflow. All controls are aligned with COSO 2013 and the ICAI Guidance Note on IFC, ensuring full regulatory compliance. We ensure each control is realistic, effective, and suitable for your team’s structure and reporting needs.Read moreRead less

Process Narratives and RCM Preparation

This documentation makes it easy for auditors and management to understand how each control works and how risks are addressed. For seamless audit readiness, we prepare clear and structured documentation, including:Read moreRead less

Process Narratives and Flowcharts
Risk–Control Matrices (RCM)
Control Activity Sheets and Testing Templates

Control Testing and Validation

Our testing covers end-to-end processes and provides a clear view of control strength. We conduct both Design Effectiveness (DE) and Operating Effectiveness (OE) testing. This ensures:Read moreRead less

Controls are properly designed
Controls operate consistently as intended
Evidence is adequate for audit review

Gap Analysis and Remediation

We support your team until each gap is fully resolved. If any weaknesses, gaps, or control failures are identified, we prepare a detailed remediation plan. This includes:Read moreRead less

Root-cause analysis
Corrective action steps
Assigning ownership and timelines

Final IFC Handover

Once implementation is complete, we deliver a full IFC documentation pack that is immediately ready for auditor review. This includes all narratives, RCMs, testing results, and sign-off documents. Our structured handover ensures smoother statutory audits, internal audits, and management reviews.Read moreRead less

Deliverables You Receive

When you choose Taxlegit for your Internal Financial Control setup, you get a complete and practical IFC documentation package that’s ready for auditors, management review, and compliance reporting.

Detailed Process Narratives and Flow Diagrams

Clear documentation of how each process works, supported by easy-to-follow flowcharts that help auditors and management understand every transaction step.

Risk–Control Matrix (RCM)

A structured list of key business processes with identified risks, mapped against the controls designed to mitigate them. Each RCM is tailored to your business areas, such as procurement, payroll, or finance.

Design and Operating Effectiveness Testing Reports

Reports showing how each control has been tested for both design and operation, demonstrating that controls are not only created but are also actually working as intended.

Control Deficiency and Remediation Tracker

A simple yet effective tracker that highlights control gaps, recommended actions, and closure status to help management monitor follow-ups efficiently.

Auditor-Ready IFC Summary Report

A consolidated report that presents your entire IFC framework in a format preferred by auditors, making reviews and sign-offs smoother.

Optional SOPs Integrated with Financial Controls

Where necessary, we incorporate standard operating procedures that align with financial controls to ensure uniformity and accountability in daily operations.

Who Should Implement IFC Now

Even when not mandatory, IFC implementation demonstrates governance maturity and strengthens financial control systems.

Companies with a turnover above ₹50 crore
Businesses preparing for statutory or internal audits
Startups seeking funding or investor due diligence
Organizations undergoing ERP or system migration
Companies receiving auditor recommendations for IFC documentation

Key Business Benefits

Audit Readiness: Complete documentation and testing evidence ready for statutory audits.
Fraud and Error Prevention: Strong checks to prevent unauthorized transactions and financial misstatements.
Process Efficiency: Streamlined approvals and accountability through standardized workflows.
Auditor Confidence: Controls aligned with ICAI and COSO standards.
Investor Assurance: Enhanced governance and transparency for management and stakeholders.

Our IFC Methodology

Our structured methodology ensures compliance and enhances process efficiency across departments.

Phase	Objective	Output
Process Walkthroughs	Understand operations and risk areas	Process documentation
Control Design	Map controls to identified risks	Control listings and RCM
Control Testing	Evaluate design and operation	Testing sheets with evidence
Gap Closure	Rectify weak or missing controls	Updated RCM and remediation report
Reporting and Sign-Off	Provide final documentation	IFC report for audit and board review

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