CS Professional · Internal and Forensic Audit · Internal Controls

Under section 134 of the Companies Act, 2013, the Directors' Responsibility Statement of a listed company must state that the directors had laid down internal financial controls and that such controls are adequate and operating effectively. For this purpose, which description fits the Act's explanation of internal financial controls?

The Act defines internal financial controls as the policies and procedures adopted by the company for orderly and efficient conduct of business, including adherence to policies, safeguarding assets, preventing and detecting frauds and errors, accuracy and completeness of records, and timely reliable financial information.

1. AOnly the policies for preparing financial statements and filing returns
2. BOnly the procedures followed by the statutory auditor in testing accounting records
3. CPolicies and procedures for orderly and efficient conduct of business, including safeguarding assets, preventing and detecting frauds and errors, accuracy and completeness of accounting records and timely reliable financial informationCorrect
4. DOnly the physical safeguards over cash and inventory