Vadodara Audit Club

The write up on proceedings at Annual Conference 2013 of IIA Vadodara Audit Club

The IIA Vadodara Audit Club celebrated its 3rd Annual Day event by organising annual conference having theme “Internal Audit in Business Strategy”on 18th May 2013 at Surya Palace Hotel, Vadodara. The conference was very well attended in large number – around 260 by IIA members, practicing professionals as well as leaders from various industries in a sprawling ball room with conference facilities matching international standards.

In the beginning Mr. Rohit Kothari, President, IIA Vadodara Audit Club welcomed the faculty and the delegates. Mr. Bhupesh P. Porwal took over and explained the reason and logic behind the theme of the conference and also shared statistics for a survey done which was related to the theme.

• The conference was inaugurated by Mr.Premraj Keshyep, Managing Director of KYB-Conmat Pvt.Ltd. and also Chairman of Confederation of Indian Industries (CII); Central Gujarat.Mr. Keshyep explained how internal audit function has added value in business expansion. He even went on to mention that ‘Business without Internal Audit is like moving without direction, in a maze, no idea, where to go?’. He took audience through the journey of his company and explained how internal audit helped in alignment of Organisational Culture, Values and People for business processes, planning strategies and executing expansion plans.

• The Key Note Address was delivered by Mr. Shyam Bang; Executive Director of Jubilant Life Sciences Ltd. Mr.Bang explained how and why his opinion has changed in last 15 years about internal audit function and how the internal audit division in his company has helped the company to meet their goals.

The conference had four main Sessions namely, “Change in Audit Focus from ‘Process’ to ‘Strategy’”, “Risk Mitigation in E-Commerce”, “Recession and Resources, How to Manage?” and “Change Management - How can Internal Audit Help?”,respectively.

The First Technical Session:“Change in Audit Focus from ‘Process’ to ‘Strategy’”
Mr. Anil Bhandari of ANB Consulting Co. Pvt. Ltd. explained with practical examples what internal audit should do, why operational knowledge is so important to know for the auditor and also its business challenges. He also talked about the importance of technology which helps us to do the job better.

Mr. T. Sankar, Chief Internal Auditor, Blue Star Limited explained about the evolution of the internalaudit function which has reached from process upto strategy and how their internal auditdivision has helped the company in Merger & Acquisition process. He explained the shift in process through a story of bank robbery. He also stressed to change focus of internal auditor by stressing that he has to be a businessman first and then auditor. He also explained how to balance Risk, Cost and Value. He beautifully showed how to change the approach of internal audit – from criteria to benchmark, cause to reason, effect to impact and recommendation to facilitate action. By doing so there is a complete transformation of internal auditor in to a strategic advisor.

The Second Technical Session:“Risk Mitigation in E-Commerce”
Mr. A. Balaji, Group Chief Information Officer, Piramal Group talked about the business side of various risks and how one can mitigate this. He also explained about the difference between technology and process available with US and other developed countries and India. He also covered following aspects:

• Unique trends in our country related to E-commerce such as 80% of all transactions are pertaining to travels, low penetration of credit cards, high penetration of mobiles etc.

• Risks related to E-commerce in to general risksuch as evolving business model, outdated technology, shorter lifespan, low customer loyalty, high incidence of fraud, low average profit per unit etc. and specific risk such as high return rate (40%) in cash on delivery transactions, price sensitive young generation amplifying low customer loyalty, absence of security and fraud controls, lack of localised innovations, poor design of user experience etc. and its mitigation strategies.

• He explained that we have to think in the terms of affordable strategies of mitigation of abovementioned general and specific risks and provided meaningful data of status of all risk e.g. India suffered losses of approximately $8 Billion due to cyber crime in 2011, An estimated 14,392 websites in the country were hacked in 2012, 95% of Indian E-Commerce sites have experience one form or another of cyber attack etc. and also provided checklist of controls.

Ms. Smita Gune of ANB Consulting Co.Pvt.Ltd.talked about the functional side of risk in e- commerce. She emphasised more on credit risk and about risk associated with credit cards and how one can mitigate this. She explained following aspects:

• Credit risk from Banks’s perspective such as 2 Cs of credit risk (character and capacity of user), fraud risk, information technology risk etc. She also provided data for above risks as well as different types and methods of such risks.

• She also gave Merchant’s perspective of Credit Risk such as use of stolen cards, false claim by customers, information technology risk like technical failure, deliberate acts and management failures etc.

• She also narrated mitigation measures for abovementioned risks such as legislations, use of chip cards, additional pin after swiping of card, SMS alert etc. for bankers and checklist of habitual defaulters, verification of email/shipping address, phone check, signature/photo id etc. measures for merchants.

The Third Technical Session:“Recession and Resources, How to Manage?”
Ms.Kejal Pandya compered the second part of the conference and invited panel speakers on the dais.

Mr. K.S. Sundara Raman, Group Head-Audit, Adani Group speaking on “Recession and Resources-How to Manage?”explained positive Dos and Don’ts of recession,of available time and resources aswell as on “knowable unknowns and unknowable unknowns” of recession. He covered following aspects:

• He stressed need for management to keep positive attitude in recession time and think that this phase is for reality check – to relook at cost, tightening of belts and cutting flabs; time to enhance employee skills and improve their performances as workload will be less; assess new technologies to drive future growth (e-commerce revolution was result of recession due to dotcom bust) etc.

• He also suggested action plans for recession period such as appropriate preparedness by management such as sort out the ambiguity fast and imagine different scenarios and ramifications, steady people’s nerves and improving finance & operations etc.

• He also explained how internal audit can provide unique insight and deliver “real-time” value to their organizations by revisiting their methodology, processes and practices to focus on the right things, standardization of methods, utilizing self-assessment techniques to increase coverage and efficiency, leveraging technology tools and techniques to increase productivity etc.

• He specifically enumerated cost control measures required to tackle recession effectively such as renegotiation of handling rates, purchase rates, professional fees, hired accommodations, optimum utilisation of machineries/DG sets, tight inventory management, budgeted controls, cost conscious communications to employees and cost awareness etc.

• He concluded with a positive note that recessions do linger longer but don’t last forever….

Prof. Atanu Ghosh, Professor at S.J. Mehta School of Management, IIT, Pawai, Mumbaitook us to the journey of history of recession and also explained how recession is good for companies for mergers and acquisitions, impact ofreverse innovation etc.

Mr. N. Chandar, Ex Director(Finance), IPCLsharedhis valuable experience formanaging recession and explained how to raise resources during recession by optimisation of various operating costs.

The Fourth Technical Session:“Change Management How can Internal Audit help?”
Mr. T. Venugopalakrishna, Director Finance and IT, Xylem Water Solutions Ltd.,explained basics and process of “Change Management” and the role of internal audit through colourful presentation.He covered following aspects:

• Change Management basics, models, process and paradigm shift of management to embrace and implement change process

• He suggested internal auditors to adopt emerging risk model instead of traditional model of audit by focusing on Audit for Cost Containment potentialVsEffectiveness of Controls, thinking beyond cost controls – sustainability and environment compliances etc. To focus on future not past, potential risk on way forward, increased accountability instead of blame game etc.

Mr. Satish Chawla, President, The Institute of Auditors (IIA), India, very energetically shared his experience of contribution by internal auditor to “Change Management”. He emphatically stated that internal auditors have to raise the bar and make themselves ready for the new race where internal auditors have to play a more interactive and involved role in sustenance, development and growth of businesses on a global scale.

In his Valedictory Address Mr.Satish Chawla summed up the discussion that took place in the conference and also asked the internal audit fraternity to be ready for new challenges in the time to come in view of growing demands of the auditee managements.

Mr. Krishnaraj Jhala offered vote of thanks to the faculty and the delegates over and above the event partners, KYB-Conmat, ACL, Green Channel and Comfort Realty and all contributors for the success of the event.

Vadodara Audit Club