The Revised Risk Assessment
The transferee’s internal audit plan is based on its pre-merger risk assessment. After the scheme, the risk universe includes the transferor’s legacy processes, systems, and controls. The internal auditor should conduct a fresh risk assessment covering the combined entity and present the revised plan to the audit committee.
The Coverage of Transitional Risks
The internal audit should specifically cover the transitional risks: the integration of accounting systems; the reconciliation of inter-company balances; the transfer of statutory records; the continuity of internal controls; and the accounting for the merger under Ind AS 103. These risks are time-sensitive and should be prioritised in the first post-merger audit cycle.
The Audit Committee’s Oversight
The audit committee should approve the revised internal audit plan and monitor the remediation of transition-related findings. The committee’s minutes should record the specific risks discussed and the direction given to management.
Call to Action: For post-scheme internal audit planning, risk assessment, or audit committee reporting, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.