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INTERNAL CONTROL SYSTEM

The Public Sector undertakings owned by the Government arre subject to transparency and public accountability. To ensure transparency and accountability it is necessary that an effective internal control mechanism is development by the organization. With the enormous growth in volume and complexity of operations in the public sector undertakings and increasing decentralization of activities there is concomitant risk of a gap between ;the policy making levels and other down the line.The Food Corporation of India has developed its own internal control mechanism and for the purpose an independent Internal Audit and PV wing has been set up.

ORGANISATIONAL STRUCTURE

The Internal Audit wing of the Corporation is functioning on all India Basis under the overall supervision of Executive Director (IA), who is directly reporting to the Managing Director. He is assisted by the Manager (IA) at Zonal levels and Joint Manager and Dy. Manager (IA) at Regional levels. In the Regions there are audit teams comprising of two Assistant Managers under the supervision of Dy. Manager (IA). The no. of teams depends upon the volume of work in the region.

SCOPE OF INTERNAL AUDIT

The internal audit wing of the Corporation undertakes a critical review of the systems, procedures and operations as a whole rather than merely accounting work:

	It ensures that all the expenses incurred by the Corporation relate to the legitimate operations of the organization, are in its best interests and are in accordance with the budget provisions.
	It verifies the accuracy and propriety of the transactions as also the related reports and statistics.
	It ascertains the extent of compliance with the prescribed policies, plans, rules, regulations, systems and procedures as framed by the Corporation from time to time.
	It reviews and makes appraisal of the soundness, adequacy and application of accounting, financial and operating controls and suggests improvements therein.
	It reviews sanctions issued by the Management at various levels.
	It scrutinize contracts and purchase orders.
	It examines the prescribed books of accounts alongwith subsidiary records to ensure that these are maintained properly.
	It detects cases of fraud, negligence and thefts by the employees of the Corporation as well as by third parties and to suggest ways and means for their parevention. However, it is not reasonable to expect every fraud to be detected in course of audit.
	It conducts independent surprise physical verification of the stocks of food grains and other commodities/ articles held in the depots/ offices and to report on variations from the accounting records, which should preferably be with persons different from the custodians of the assets.
	It ascertains the relevance and reliability of accounting and other data given to the management and to the external offices.

USEFULNESS TO THE MANAGEMENT

It becomes extremely difficult for the top management to directly oversee the day to day operations carried out in so many field offices of the Corporation. The internal audit wing of the Corporation renders invaluable service to the management in assisting them by continuous review and reporting not only on the success and effectiveness of various activities, but also on the efficacy of systems, procedures and controls used for managing resources, for which the management of Corporation is responsible.

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