Study of Internal Audit Function with Financial Analysis of I-Cat

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Executive summary
Objectives of the study

* This project aims at the advanced and thorough study of internal audit system in the organization including internal controls /systems & processes. * To establish the rationale of internal audit.

* To find if the internal audit observations are complied with & corrective actions are taken on timely basis. * To look into the internal audit process and suggest practical solutions for improving the systems & Controls. * Studying the risk-profile of the organization & steps taken by the management to mitigate the risks associated. * Analyzing the external audit reports (Statutory Audit & Audit by the C&AG). * Co-ordination of Finance & A/c with other Departments of Civil, Equipments & Administration. * Steps taken by the management by way of formulating policies. Guidelines & procedures for effective control over various departments after review by audit. * Study of Project Financials along with Published Annual Report of past financial years.

Scope of the study
* Internal audit reports
* Statutory Audit Reports
* CAG Audit Reports
* Financial Statements
* Day to day activities in F & A
* Interface with other dept. etc

Chapter 1


Since liberalization, the Indian automotive industry has emerged as a ‘sunrise sector’. The automotive sector has shown a tremendous potential for growth in the past few years. This industry is actually passing through a defining phase. Due to motorization, increase in need of mobility and availability of competitive automotive manufacturing location on the global map, India is emerging as a growing market for passenger cars.

After the process of De-licensing in July 1991 the Indian Automotive Industry has grown at a spectacular rate of 17% in the last few years. The industry has attained a turnover of Rs 1650000 crores and an investment of Rs 500000 crores. Rs 35000 crores of investment are still in the pipeline. The industry also makes a starling contribution of 17% to the kitty of indirect taxes.

On an average India produces 13 lakh passenger vehicles, 4 lakh commercial vehicles and 76 lakh two wheelers every year. The automotive industry is the source of employment for more than 1.3 crore people every year.

The Indian Automotive industry has installed a robust capacity. The installed capacity in different segments of automobile industry is shown in the following table.

Table 1.1 Installed capacity in Different segments in nos.
S.No| Segment capacity| Installed|
1| Four Wheelers| 1590000|
2| Two & Three Wheelers| 7950000|
| Grand Total| 9540000|
| | |
Reasons for growth in the automotive sector during the past few years are listed as follows:

* Growth of Indian middle class:
The Indian middle class (450 million in 2007 as per NCAER) has witnessed a tremendous growth in the past few years. The increasing purchasing power in hands of the people along with strong growth in the economy over the years attracted the auto manufacturers to the Indian market. * Linked exchange rate

The market linked exchange rate and the availability of trained labor at a low cost was another major reason for the growth of the Indian automotive sector * Boom in the Indian market
Increase in the pull of the Indian market attracted a lot of auto manufacturers to invest in India. On the other hand there was stagnation in the auto sector in markets of USA, EU and Japan which worked as a push factor for shifting of new capacities and flow of capital to the auto industry in India. * Increasing competition

The increase in healthy competition in auto companies has lead to multiple choices for Indian customers at a competitive cost. It also leads to improvement in productivity by almost 20% which is actually the highest in Indian manufacturing sector. * Well developed...
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