Sharing multiplies the effects of the good practices


Ambuja Cements Ltd, a part of the global conglomerate LafargeHolcim, is one of the leading cement companies in India and is known for its hassle-free, home-building solutions. Internal Audit department in the Ambuja Cements Ltd was established in the year 1986 (even before the first truck rolled out of the plant) by the foresighted Principal Founder-Promoter of the Company. This function has firmly established its place at the table, witnessing multitude of internal / external changes, growing in this journey and graduating from a legacy setup to adapting world-class multinational internal audit practices.

It is rightly said that, “Sharing multiplies the effects of the good practices”. With a purpose to advocate exercising of best Auditing practices across all Internal Audit fraternity in India, with all modesty, we wish to share some of our best practices as entailed below:

Internal Audit Risk Assessment activity:

We firmly believe in “Better planned is half done”. We have adopted a comprehensive Risk Based Internal Audit Planning Process. The exquisiteness of our process is that we always harp on continuous improvement and align with the business structure.

The inception of the process is by plotting the roadmap and milestones from kick-off of this activity till the Audit Committee approval. A comprehensive team mixed levels of experience is formed with clear roles and responsibilities. The Internal Audit Risk Assessment activity is performed at Company level with a bottom-up approach. This serves as the basis for the preparation of the Annual Internal Audit Plan. We follow a logical and conceptual process wherein various parameters are deliberated and considered. It has following stages:

  • Determining and categorising IA universe. It has been simplified to include almost all sub-processes. The audit universe entails the auditable and non-auditable areas encompassing all the aspects of the business covering the core and support processes. This activity forms the base for next stages.
  • Risk understanding aligned with Business Risk Management and Internal Control Standards.
  • Function wise risk assessment conducted by assigning to the following parameters:
    1. Previous years’ results,
    2. Importance at Company and changes in process / key personnel,
    3. Risk identification encompassing internal as well as external constituents that may give rise to risks across the audit universe,
    4. Probability / impact assessment of what can go wrong (including fraud risk)
  • The outcome of the steps above results are compiled for each function and then prioritized for deriving the IA Plan

We use a visual basic-cum-excel based tool wherein the outcome is consolidated for all the processes of the Company. There is a maker-checker control of Risk Assessment within the department. The outcome from the IA Risk Assessment process is validated with Management and is then finally presented to the Audit Committee for approval.

The process of risk assessment has matured over years and is being improvised with each passing year. This has been successful in keeping the Internal Audit Plan value adding and pertinent each year.

Use the Work of an Auditor’s Expert

Indian as well as International Standards on Auditing have guidance on use of work of Experts in the auditing process. We have been using the work of experts in various technical areas like Safety audits, Energy efficiency, Indirect Tax, etc. Persons from technical department are co-sourced in the auditing fieldwork. This is a win-win scenario for both management as well as Internal Audit. Based on previous years’ experience in such co-sourcing assignments, following are the strengths to be leveraged and challenges to be addressed in such endeavours:

Strengths Challenges
Better analysis of facts for gap analysis Experts not familiar with the auditing skills of interviewing, evidence collection, reporting, etc.
Acceptability of the auditor’s point of view Time constraint in engagement of experts
Value adding and implementable solutions Availability of best-fit expert for the relevant subject

We addressed the challenges by familiarising/assisting the experts with the auditing process. The selection of right resource was done through the Functional Head, which assured of dedicated availability of the resource for the fieldwork.

The issues reported through such co-sourced audits were helpful in recommending value adding solutions to the management. This effort has been appreciated at all the levels of management and also at the Audit Committee level.

IA Meet

We have since ~20 years carried out the tradition of conducting “Internal Audit Meets”. IA Meet is a forum wherein all the Internal Audit staff meet, deliberate and chalk out action plans for continuous improvement of audit processes. The objective of such meet is to share experiences, reflect upon the IA activity, identify process improvements and formulate action plans for the IA department.

The exchange of ideas and rich experiences, spiced with contrasting views and supported with personal anecdotes help to bring in better awareness into the collective consciousness of the function. The introspective mode fosters deeper insight into the existing audit practices and areas of improvement are churned out as a result. Collaborative efforts are taken to chart out practical “to-dos” having defined due dates.

Through various value adding initiatives, constant attempt is made by Internal Audit activity to increase its outreach and establish the “assertive and supportive” image of Internal Audit in the organisation. This has helped in establishing a climate of trust in the Internal Audit activity in the organisation, which in turn leads to better acceptability of the audit activities and lesser push-backs.

Thus in Ambuja Cements Limited, internal Audit Function lives the core values of Agility, Collaboration and Empowerment in a sustainable manner.

We are sure that the Internal Audit fraternity at large will imbibe, the best practices shared above and march towards the vision of establishing / sustaining better – higher – stronger “Internal Audit”. All the very best!!

About the author

Mr.Prabhakar Mukhopadhyay, a Chartered Accountant, Grad. Cost Accountant with a Masters degree in Commerce from the Kolkata University, currently leads the Internal Audit function at Ambuja Cements Ltd in capacity of Chief Internal Auditor.

Internal audit function at Ambuja Cements is a recipient of Best Application of Technology Award 2017 by The Institute of Internal Auditors, Bombay Chapter.

With experience of over 23 years both in India and internationally, in areas of Internal and External Audit, Corporate Governance, Risk Management, SOX compliance, Financial Accounting, Controlling and Investigations, Prabhakar has been associated with reputed Multinational Corporations. He is a prolific speaker who takes keen interest in wide range of topics like history, philosophy, music, cricket and travel.