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5. IndusInd Bank (2025): IndusInd Bank The Vital role that Auditors and Board
disclosed that an internal review of its should be playing
derivatives portfolio revealed discrepancies,
estimating an adverse impact of approximately Auditors play a crucial role in providing assurance
$250 million on its net worth as on 31st to audit committees and boards by verifying that
December 2024. an organization’s financial statements are accurate,
complete, and transparently represent its business
While above are some of the key ones noted from activities, internal controls and processes are
India, we have similar such cases of accounting functioning as desired.
lapses that the global companies have seen with a
much bigger impact leading to major regulatory • Evolving Risk Landscape
reforms including Sarbanes-Oxley Act, enhanced
auditor independence requirements, and Internal auditors serve as early risk detectors,
strengthened corporate governance standards spotting potential threats before they escalate
worldwide. to board concerns. Today’s rapidly evolving risk
landscape makes traditional annual assessments
These cases collectively demonstrate how insufficient. Auditors’ daily operational insights
governance failures—including insufficient offer real-time risk intelligence that could enhance
independence, inadequate financial expertise, governance agility.
conflicts of interest, and cultural deference to
management—can enable massive accounting Boards that engage with internal audit beyond
irregularities with devastating consequences for formal reporting cycles gain valuable perspectives
stakeholders and markets. They underscore the on emerging risks not yet documented in standard
critical importance of vigilant, independent board registers. This continuous communication enables
oversight and robust internal control systems in proactive risk management rather than crisis
corporate governance.
reaction.
It is worthwhile to note National Financial
Reporting Authority (NFRA) Chairman’s Stance • Beyond Financial Controls
reiterating the Audit Committee Responsibilities
with an emphasis on strengthening corporate Internal audit’s role extends well beyond financial
governance through more effective Audit oversight to evaluate diverse risks including
Committee oversight and auditor engagement operational, cybersecurity, compliance, cultural,
and strategic challenges.
• Audit Committees, mainly comprising
Independent Directors, cannot avoid Audit teams desire boards to utilize their
responsibility for ensuring accurate financial comprehensive insights rather than limiting
statements, even when auditors fail discussions to financial matters. This narrow focus
prevents addressing critical non-financial risks
• Regular, substantial communication between that could significantly impact the organization.
Audit Committees and auditors is essential Forward-thinking boards view internal audit as a
valuable source of comprehensive risk intelligence
• Section 177 of Companies Act requires listed rather than just financial compliance verification.
companies to have Audit Committees with at
least three Directors (majority independent) • Value of True Independence
• Audit Committees should learn from past Independence represents the cornerstone of
disciplinary actions against auditors effective internal auditing, yet many audit
functions face subtle pressures that compromise
• Auditors must question management about this essential quality. Internal auditors wish
financial statements, especially regarding boards fully understood the importance of actively
related-party transactions and internal protecting audit independence from management
controls influence.
27 INTERNAL AUDIT TODAY
