Arohan Annual Report FY 20-21

training. The team is composed of qualified individuals who are members of the Institute of Chartered Accountants of India, hold Master of Business Administration degrees, or have Certified Information Systems Auditor certifications. Additionally, Arohan continuously invests time and efforts to upgrade the skill sets, as well as enhance knowledge of the audit team members through regular trainings and workshops. As on March 31, 2021, Arohan’s Internal Audit team comprises of 154 skilled auditors, spanning its geography, sourced carefully through a rigorous selection process. In FY 2020-21, the Internal Audit department has successfully audited 735+ active branches on a quarterly basis, spanning Microfinance, MSME and Business Correspondence operations. The Microfinance and Business Correspondence branch audit coverage rate is 100% in all quarters, except for Quarter 1 and 2 of FY 20-21, where physical auditing was restricted due to COVID-19 lockdowns. The function is supported by a real-time Audit Management System (AMS), named ‘Perdix’ with technological support from Dvara Solutions (Formerly IFMRRural Finance). The Perdix platform provides access to audit schedules, input screens and the entire audit database, including auditable data such as cash management processes, fixed assets and loan documents, via a web-based platform. Perdix also offers the functionality to automatically distribute and calculate branch audit scores based on the pre-set weightage and severity. Additionally, Arohan’s Internal Audit team uses data analytics, which enables offsite generation of exception reports, MIS, and various other analytical reports for use by the Audit team, as well as Management. Through this web-based system, Arohan’s Internal Audit function captures Managed appropriately by qualified professionals having in-depth understanding of the business culture, systems and processes, the Internal Audit function of the organisation acts as a third line of defence by monitoring adherence to controls and providing inputs for strengthening risk management. Arohan’s Internal Audit function adopts a Risk Based Supervision (RBS) approach aligned to the guidelines of the Reserve Bank of India. The function has already completed a gap analysis in its process of complying with all the provisions of the Reserve Bank of India, circular dated February 3, 2021 on “Risk Based Internal Audit (RBIA) for all non-deposit taking NBFCs, with asset size of Rs. 5000 Cr and above”. Additionally, the function adheres to relevant guidelines as prescribed by the Companies Act, 2013 and the rules thereunder, and standards of internal audits issued by Institute of Chartered Accountants of India (ICAI), to ensure credibility, resilience and transparency in Arohan’s governance processes. Quality Certification In FY 2019-20, the Internal Audit function of Arohan has been certified with ISO 9001:2015 by the British Standards Institution (BSI) for operating a Quality Management System which complies with the requirements of the certification for conducting Internal Audit for Operations and all other Support Functions. In December 2020, the certificate was further revalidated for one year after an annual surveillance audit. Infrastructure Internal Audit in microfinance is a specialised function which requires combination of field knowledge with specialised auditing skills. In Arohan the Internal Audit team is structured in a way to combine the essence of both, handpicked field auditors who are seasoned field personnel and pairing them with people with formal audit Annual Report | 2020-2021 58