Arohan Financial Services Limited | Annual Report 2021-22

INTERNAL AUDIT MANAGEMENT Arohan, as its second pillar of quality, has a well-established Internal Audit and Control System in place that monitors the adherence to policies, procedures and systems. Internal Audit, at Arohan, functions as an independent department under the supervision of the Audit Committee of Board. The Audit Committee reviews the adequacy and effectiveness of Company’s Internal Audit function including the structure of Internal Audit department, Annual Audit Plan and Staffing, while ensuring an effective and independent review process. Arohan’s Internal Audit function is a Board regulated, independent consulting body which provides high quality counsel and precise insights to the management on the efficacy of internal control, process adherence, risk management and governance across the organization. Managed appropriately by qualified professionals having in-depth understanding of the business culture, systems and processes, the Internal Audit function monitors adherence to controls, providing inputs for strengthening risk management. Internal Audit, at Arohan, adopts a Risk based Supervision (RBS) approach in line with the guidelines of the Reserve Bank of India. The function has already completed a gap analysis and is compliant 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 INR 5000 Cr and above.” Additionally, the function also adheres to the relevant guidelines as prescribed by the Companies Act, 2013 and rules thereunder, and the standards of internal audits issued by the Institute of Chartered Accountants of India (ICAI), which ensures credibility, resilience and transparency in governance processes. Quality Certification The Internal Audit function of Arohan has been accredited with the ISO 9001:2015 certification in FY2019-20 after a detailed assessment conducted by the British Standards Institution (BSI) of compliance to the necessary requirements for conducting Internal Audit for operations and all support functions. This certification is a testimony of the organization’s commitment to excellence in quality management functions and its focus on scaling it further to ensure business precision. The certificate was further revalidated for one year after an annual surveillance audit in December 2021. Infrastructure Internal Audit in the microfinance industry is a specialised function which requires a combination of field knowledge and specialised auditing skills. In Arohan, the Internal Audit team is structured in a way to combine the essence of both, by handpicking field auditors from amongst seasoned field personnel and pairing them with people with formal audit training. Additionally, Arohan continuously invests time and effort to upgrade the skill sets, as well as knowledge of its employees including the Audit team members through regular and Arohan’s Internal Audit team comprises of 145 skilled auditors, spanning its geography, sourced carefully through a rigorous selection process. In FY2021-22, the department has successfully audited 740 plus active branches on a quarterly basis, spanning microfinance, and Business Correspondence operations. The microfinance and Business Correspondence branch audit coverage rate is 100% in all quarters of FY 2021-22, except for Q1 & Q2, where physical auditing was restricted due to COVID-19 situation in the country. 76 Annual Report | 2021-2022