Arohan Financial Services Limited | Annual Report 2022-23

Data Analytics and Machine Learning. The capabilities built meticulously over the years and the strong domain expertise allows Arohan to move seamlessly into its next phase of growth, while remaining amongst the best-in-class, on risk modeling and adoption of future-fit approaches using machine learning tools and platforms. INTERNAL AUDIT MANAGEMENT Arohan’s Internal Audit function continues to provide independent assurance and advice on the processes and systems of internal control and risk management of the Company. Internal Audit, as a consulting body, provides high-quality counsel and precise insights to the management on the efficacy of internal control, process adherence, risk management, and governance across the Company. The function is an ISO 9001:2015 accredited quality vertical. In FY 2020, the British Standards Institution (BSI) certified the function for compliance with the standards and necessary requirements for conducting Internal Audit. This certification is a testimony of the Company’s commitment to excellence in quality management functions and its focus on scaling it further to ensure business precision. In FY 2023, BSI further re-certified the same for three more years after a detailed surveillance. Internal Audit at Arohan functions as an independent department under the supervision of the Audit Committee of Board. The Audit Committee reviews the structure of the Internal Audit department, Annual Audit Plan, and Staffing while ensuring an effective and independent review process. Arohan has adopted a Risk-based Supervision (RBS) approach in line with the guidelines of the Reserve Bank of India. The function is compliant with all the provisions of the Reserve Bank of India circular dated February 3, 2021, on “Risk Based Internal Audit (RBI) 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. Infrastructure Internal Audit in the microfinance industry is a specialised function that 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 - field auditors from seasoned field personnel and also professionally qualified auditors. Additionally, Arohan continuously invests time and effort to upskill, as well as enhance the knowledge of its employees including the Audit team members through regular training and development programmes. The Internal Audit team at Arohan comprises 3 CharteredAccountants, 2Qualified Information System Auditors (CISA & DISA), 1 Certified Internal Audit (CIA), and six MBAs spanning the Head Office level and field, which gives extra mileage in the professional outlook of the team. In line with Arohan’s stance on gender diversity, the team also has 6 female members who, rare in this industry, are in the forefront as leaders handling field audits on the ground. In total, the team comprises 149 skilled auditors. In FY 2023, the department has successfully audited 750 plus active branches on a quarterly basis, spanning microfinance, digital lending, and inorganic operations. The microfinance and inorganic branch audit coverage rate is 100% in all the quarters of FY 2023. Audit Management System (AMS) In FY 2023, Arohan moved its Audit Management System (AMS) in-house, supported and developed by its robust technology infrastructure. The real-time AMS is aweb-based systemthat enables seamless audits and is programmed to successfully capture audit findings in a structured and scheduled manner. The platform enables real-time tracking of audit progress, allowing quick escalation of significant issues and monitoring closures with optimised working efficiency, all within a measured time frame. Fraud Management System (FMS) In FY 2023, Arohan rolled out a fully digital Fraud 59 | Annual Report 2022-23