{"id":812,"date":"2019-10-24T13:05:48","date_gmt":"2019-10-24T13:05:48","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=812"},"modified":"2022-11-16T13:01:15","modified_gmt":"2022-11-16T07:31:15","slug":"internal-and-statutory-audits-in-nbfc","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/","title":{"rendered":"Internal and Statutory Audits in Non-Banking Financial Companies"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Audits are a necessary element in the functioning of any company and also for NBFCs. Every NBFC must conduct checks to ensure compliance of all prescribed norms and avoid any penalties. Also, NBFCs need to obtain the certificate from Statutory Auditor that they are engaged in non-banking financial institutions holding a Certificate of&nbsp;<a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC Registration<\/strong><\/a>&nbsp;under Section 45-IA of the RBI Act, 1934 proving their eligible.&nbsp; In this blog, we are going to learn all about audits in NBFC.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Audit\" >Audit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Type_of_NBFC_Audits\" >Type of NBFC Audits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Type_of_Audits\" >Type of Audits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#What_are_Statutory_Audits\" >What are Statutory Audits?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Who_conducts_it\" >Who conducts it?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#What_is_Internal_Audits\" >What is Internal Audits?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Who_conducts_it-2\" >Who conducts it?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Key_Audits_Areas_of_NBFC_Whats_included_in_the_Auditors_Report\" >Key Audits Areas of NBFC: What\u2019s included in the Auditor\u2019s Report?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Duty_of_auditor\" >Duty of\nauditor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Audits_of_NBFC_Procedure\" >Audits of NBFC: Procedure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Classification_of_frauds_by_NBFC\" >Classification\nof frauds by NBFC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Difference_between_Statutory_and_Internal_Audits\" >Difference between Statutory and Internal Audits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/corpbiz.io\/learning\/internal-and-statutory-audits-in-nbfc\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Audit\"><\/span>Audit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Audit or\nauditing is a process to check if a particular company is working in compliance\nwith all the guidelines and regulations directed to them and which they need to\ncomply with. It means verifying the activities are happening on-site\/ within\nthe company.<\/p>\n\n\n\n<p>It\nincludes inspection or examination of processes and quality systems to ensure\ncompliance with the regulatory guidelines. Auditing can be either of some\nspecific functions, processes, etc. or of the entire company. Some audits have\na particular purpose why they are conducted such as, auditing documents, risk,\nperformance, or following up on specific corrective actions.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Type_of_NBFC_Audits\"><\/span>Type of NBFC Audits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are three different types of NBFC audits, according to the ISO 19011:2018 standards. These are as follows;<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"436\" height=\"330\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-11.png\" alt=\"Type of NBFC Audits\" class=\"wp-image-27594\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-11.png 436w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-11-300x227.png 300w\" sizes=\"(max-width: 436px) 100vw, 436px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Type_of_Audits\"><\/span>Type of Audits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Process Audit<\/strong>: It is a type of audit that is conducted to verify if the processes in the companies are following the predetermined      instructions by the governing bodies. Also, the objective of performing      this type of audit is to ensure any company process does not involve any activity that does not adhere to these rules.<\/li><li><strong>Product Audit<\/strong>: This type of audit is for any specific product or service. The auditing of the product\/service may include hardware, processed material, or software, to ensure that they conform to the specifications, performance standards, or customer requirements.<\/li><li><strong>System Audit<\/strong>: This type of audit conducted on the management level. It is done to ensure proper system developed and whether      everything is useful and in conjunction with the specified requirements.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Statutory_Audits\"><\/span>What are Statutory Audits?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As the\nname suggests, it is a type of audit that is mandatory for all companies\nregistered under the&nbsp;<strong>Companies Act, 2013<\/strong><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/companies-act\/companies-act-2013.html\"><strong><sup>[1]<\/sup><\/strong><\/a>. The purpose is almost the same as\nthe internal audits. However, it is a compulsory audit directed by the law,\nunlike internal audits.&nbsp; The Statutory Auditor makes a report after\nauditing the Book of Accounts of the company in the prescribed format.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_conducts_it\"><\/span>Who conducts it?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per RBI\nguidelines, a CA conducts the Statutory Audit under the Companies Act, 2013. It\nis a type of audit performed by the qualified auditors who work as an external\nauditor and independent parties<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Significance of Statutory Audits<\/h3>\n\n\n\n<p>The main\nobjective of conducting a Statutory Audit is to ensure whether the company is\nproviding a fair and accurate representation of its activities by evaluating\nthe bank balances, bookkeeping records, financial transactions, etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Internal_Audits\"><\/span>What is Internal Audits?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Internal\naudit is the process to evaluate the internal control systems of the company,\ncorporate governance and the processing of the accounts. The purpose of\ninternal audit is to identify problems and find their solutions before any\ninspection.&nbsp; It helps detect any issues within the internal systems in the\ncompany, and ultimately improve operational efficiency.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Importance of Internal Audits<\/h3>\n\n\n\n<p>Internal\naudits are important because it helps to identify problems in the functioning\nof the company and solve them. It improves the effectiveness of governance,\ncontrol processes, and risk management. By conducting an internal audit, the\ncompany can avoid penalties that might be imposed on them otherwise. However,\nperforming an internal audit is not mandatory, unlike the Statutory Audit. But,\nit is done to check every function and other aspects that might be caught by a\nStatutory Auditor and the company might become liable for the\npenalty.&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_conducts_it-2\"><\/span>Who conducts it?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&nbsp;Audits\nin NBFC are conducted by an eligible person appointed by the management of the\ncompany. It is generally lead by a Chief Audit Executive {CAE} who then reports\nto the Audit Committee of the Board of Directors with administrative reporting\nto the Chief Audit Officer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Auditor\u2019s Report<\/h3>\n\n\n\n<p>The\nReserve Bank of India formulates the auditor\u2019s directions under section 45MA of\nthe RBI Act, 1934. The RBI guidelines are applicable to auditors of all\nregistered\/non-registered NBFCs whether they are accepting deposits or not.<\/p>\n\n\n\n<p>The\nAuditor creates a report on the matters he audits and submits it to the Board\nof Directors of the company. The report that the auditor makes is as per\nSection 143 of the Companies Act. The contents of the Auditor\u2019s report are\ndifferent in different cases such as if the NBFC has obtained the Certificate\nof Registration { CoR } from the bank, if the NBFC already has obtained CoR,\netc. The audit is conducted once, at the end of every financial year or every\nfiscal. Moreover, the Auditor\u2019s report must include the reason for the all\nunfavorable or qualified statement given by the auditor on the contents of the\nreport and submit a separate report to the Board of Directors of the company.<\/p>\n\n\n\n<p>This report must be submitted to the Regional Office of the NBFCs at the end of the financial year. This has to be done within one month from the date of finalizing of the Balance Sheet and should not be later than 30<sup>th<\/sup>&nbsp;December of that year.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/nbfc-dsa-registration-documentation-and-process-for-becoming-direct-selling-agent\/\">NBFC DSA Registration: Documentation and Process for becoming Direct Selling Agent\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Audits_Areas_of_NBFC_Whats_included_in_the_Auditors_Report\"><\/span>Key Audits Areas of NBFC: What\u2019s included in the Auditor\u2019s Report?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are\nmany matters that are included in the Auditor\u2019s Report, and that differs in the\ntype of activity the NBFC is indulged in. Here are I am giving you a few of\nthem which will help you understand the broad aspect of the key inclusions in\nthe Auditor\u2019s Report:<\/p>\n\n\n\n<ul><li>Physical verification of all the share\/ securities held by the firm<\/li><li>NBFC Prudential Norms stipulated or not<\/li><li>Verifying whether the NBFC has not advanced any loan against their shares<\/li><li>Whether KYC performed or not<\/li><li>If  there is any window dressing, i.e. whether a new loan is passed to repay an existing loan<\/li><li>Checking the Board\u2019s Minutes for purchase of any purchase and sale of investments<\/li><li>Ascertaining whether the requirements of the AS 13 \u201cAccounting for Investments\u201d has been compiled by the NBFC<\/li><li>Obtaining the balance confirmations of the concerned parties<\/li><li>Checking whether the NBFC has lent\/invested in the specified limits to any single borrower<\/li><li>Confirming whether the NBFC has a proper appraisal and follow up on loans and advances<\/li><li>Verifying that the payment for acquiring an asset is directly made to the supplier and the original invoice has been drawn out in the name of the NBFC<\/li><li>Confirming if the hire purchase is against&nbsp; vehicles then the registration certificate contains an endorsement in favor of the hire purchase company<\/li><li>Also, confirming that the assets given on hire purchase are adequately insured against it<\/li><li>Ascertaining that the NBFC has proper appraisal system for extending the equipment leasing finance<\/li><li>Verifying that the lease agreement entered into with the lessee in the request of equipment given on lease<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Duty_of_auditor\"><\/span>Duty of\nauditor<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ol><li>Compliance with NBFC Auditors Report RBI Directions<\/li><li>Auditors to submit additional report to the Board of Directors<\/li><li>Matters to be included in the auditor\u2019s report<\/li><li>Reasons for any unfavourable or qualified statements shall be stated.<\/li><li> Obligation of auditor to submit an exception report to the bank. <\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Audits_of_NBFC_Procedure\"><\/span>Audits of NBFC: Procedure<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The following are the steps how audits of NBFC are conducted in a non-banking financial company;<\/strong><\/p>\n\n\n\n<ul><li><strong>Step 1:&nbsp;<\/strong>The first step is to determine the type of  work the NBFC does by checking the company\u2019s Memorandums and Articles of      Association.&nbsp; If the auditor finds it necessary may also inspect the      minutes of the Board\/Committee Meetings and discuss with apex level      management people to understand a better picture of the principal      functions of the company.<\/li><\/ul>\n\n\n\n<p>Determining\nthe principal business activities such as providing loans, Investment Company,\netc. in which the company is involved to determine the norms which the company\nneed to comply with accordingly.<\/p>\n\n\n\n<ul><li><strong>Step 2:&nbsp;<\/strong>Next, the auditor evaluates the Internal Control System of the company. The functions of the Internal Control System include maintaining an adequate system and incorporating various      measures of internal control within the organization, aids in taking      timely decisions, detecting frauds, etc. The auditor reviews the      effectiveness of the Internal Control System present in the company.<\/li><li><strong>Step 3:<\/strong>&nbsp;It is mandatory for all NBFCs having a minimum net owned fund of Rs. two crores to obtain the Certificate of  Registration for commencing its business under Section 45-IA of the RBI Act. Then the auditor obtains a copy of the Certificate of Registration of the company to ensure that the company is not carrying out business without the certificate. In case if the company has applied to obtain the      certificate, the auditor needs to get a copy of the application of the      same.<\/li><li><strong>Step 4:&nbsp;<\/strong>The auditor must ascertain if the NBFC is a loan company, an investment company, or a hire purchase finance company or an equipment leasing company. If the NBFC does not lay in any of the      classifications, the auditor classifies the type of the company to make      sure they comply with the related regulations or not.<\/li><li>&nbsp;<strong>Step 5:&nbsp;<\/strong>The auditor checks the company\u2019s compliance with the specified prudential norms based on their income source such as from investments, accounting standards, asset classification, accounting for investments, provisioning for bad\/doubtful debts, capital adequacy norms, etc.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Classification_of_frauds_by_NBFC\"><\/span>Classification\nof frauds by NBFC <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In\norder to have uniformity in reporting about frauds it has been classified as\ngiven below based on the provision of IPC:<\/p>\n\n\n\n<ul><li>Misappropriation of funds and criminal breach of trust<\/li><li>Fraudulent encashment through a forged instrument or through fictitious accounts and conversion of property and manipulation of the books of account.<\/li><li>Unauthorized credit facility extended for illegal gratification or for reward.<\/li><li>Negligence or any kind of cash shortages.<\/li><li>Cheating and forgery.<\/li><li>Any irregularity in foreign exchange transaction.<\/li><li>Any other frauds not provided under the above specified heads.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difference_between_Statutory_and_Internal_Audits\"><\/span>Difference between Statutory and Internal Audits<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are some basic differences between the Internal Audit and Statutory Audit. Such as Internal Audit is not a mandatory process; it is conducted to catch any error in the company\u2019s processing before the Statutory Auditor and many more reasons. The significant difference between the two is listed below;<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Sr. no<\/strong>\n  <\/td><td>\n  <strong>&nbsp;<\/strong>&nbsp;<strong>Internal Audit<\/strong>\n  <\/td><td>\n  <strong>&nbsp;<\/strong>&nbsp;<strong>Statutory Audit<\/strong>&nbsp;\n  <\/td><\/tr><tr><td>\n  <strong>1.<\/strong>\n  <\/td><td>\n  Conducted by Internal Auditor\n  <\/td><td>\n  Conducted by Statutory<br>\n  Auditor\n  <\/td><\/tr><tr><td>\n  <strong>2.<\/strong>\n  <\/td><td>\n  Not mandatory\n  <\/td><td>\n  Mandatory\n  <\/td><\/tr><tr><td>\n  <strong>3.<\/strong>\n  <\/td><td>\n  Conducted to check the<br>\n  operation of the company\n  <\/td><td>\n  Conducted to check various<br>\n  matters like checking the<br>\n  book of accounts, etc.\n  <\/td><\/tr><tr><td>\n  <strong>4.<\/strong>\n  <\/td><td>\n  Suggestions on improvement<br>\n  in internal check system\n  <\/td><td>\n  No suggestions on improvement in internal check system\n  <\/td><\/tr><tr><td>\n  <strong>5.<\/strong>\n  <\/td><td>\n  An Internal Auditor work under<br>\n  terms of appointment\n  <\/td><td>\n  A Statutory Auditor work<br>\n  under terms of appointment and other prescribed laws\n  <\/td><\/tr><tr><td>\n  <strong>6.<\/strong>\n  <\/td><td>\n  An Internal Auditor is an<br>\n  employee of the company\n  <\/td><td>\n  A Statutory Auditor is not an<br>\n  employee of the company\n  <\/td><\/tr><tr><td>\n  <strong>7.<\/strong>\n  <\/td><td>\n  An Internal Auditor is not an<br>\n  independent person\n  <\/td><td>\n  An Statutory Auditor is an<br>\n  independent person\n  <\/td><\/tr><tr><td>\n  <strong>8.<\/strong>\n  <\/td><td>\n  Appointed for five years\n  <\/td><td>\n  Appointed for a term of three years by the general meeting<br>\n  of the shareholders\n  <\/td><\/tr><tr><td>\n  <strong>9.<\/strong>\n  <\/td><td>\n  Internal Auditor does not need any specific qualification as per the\n  laws\n  <\/td><td>\n  Statutory Auditor must be a CA\n  <\/td><\/tr><tr><td>\n  <strong>10.<\/strong>\n  <\/td><td>\n  Conducted by the management of the company\n  <\/td><td>\n  Lead by the shareholder or the Annual General Meeting\n  <\/td><\/tr><tr><td>\n  <strong>11.<\/strong>\n  <\/td><td>\n  Continuous evaluation\n  <\/td><td>\n  Held after preparation of final accounts\n  <\/td><\/tr><tr><td>\n  <strong>12.<\/strong>\n  <\/td><td>\n  Scope of work is determined by<br>\n  the management of company\n  <\/td><td>\n  Scope of work is determined by law\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Like every\nother company, NBFC also conduct Audits to check whether they have complied\nwith all the prescribed norms and avoid penalty. There are three types of\naudits based on the key area where the auditing is done, namely; Process,\nProduct and System Audit. Internal audit is the one conducted by the internal\nmanagement of the company to check everything is in compliance and to dodge any\npenalty.<\/p>\n\n\n\n<p>On the other hand, Statutory Audit is a mandatory action conducted every fiscal. Internal Audits in NBFC is not mandatory by law; companies are allowed to choose whether they want to conduct it or not.&nbsp; The internal auditor can suggest any scope of improvement within the internal systems of the company, whereas the statutory auditors do not suggest any scope of improvement or anything else and directly impose the penalty.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/impact-of-nbfc-on-the-vehicle-and-housing-loan-sector-in-recent-times\/\">Impact of NBFC on the Vehicle and Housing Loan Sector in Recent Times\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Audits are a necessary element in the functioning of any company and also for NBFCs. Every NBFC must conduct checks to ensure compliance of all prescribed norms and avoid any penalties. Also, NBFCs need to obtain the certificate from Statutory Auditor that they are engaged in non-banking financial institutions holding a Certificate of&nbsp;NBFC Registration&nbsp;under Section [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":27602,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91],"tags":[141],"acf":{"service_id":"8"},"authorName":"Shailza Sharma","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/10\/IMG-20190927-WA0001-150x150-22.jpg","authorDescription":"Miss Shailza Sharma, BA. LLB graduate from Himachal Pradesh University. She holds an experience of 2.5 years in various Legal companies and organizations.","postViews":20158,"readingTime":7,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/812"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=812"}],"version-history":[{"count":23,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/812\/revisions"}],"predecessor-version":[{"id":50730,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/812\/revisions\/50730"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/27602"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=812"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=812"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=812"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}