International Financial Controls (IFC)

Internal Financial Controls (IFC) framework is an integral part of overall internal financial controls program of a company. Internal financial control refers to the policies and procedures adopted by the company for ensuring:

Orderly and efficient conduct of its business ,
Including adherence to company’s policies ,
Safeguarding of its assets ,
Prevention and detection of frauds and errors ,
Accuracy and completeness of the accounting records ,
Timely preparation of reliable financial information ,

Internal control is a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

Internal Financial Control is not solely a policy or procedure that is performed at a certain point in time, but rather a continuous process operating at all levels within the Company.

Legal Requirements of IFC in Albania

Law No. 10 296, dated 08.07.2010 “On Financial Management and Control in public entities” (as amended), Law No. 25/2018 “On Accounting and Financial Reporting”, NSA: The independent director must be satisfied with the integrity of financial information and that of financial controls.

Law No. 114, dated 22.10.2015 “On Internal Audit in the Public Sector”: The Board of Directors (BD) report shall include a statement that ensures the implementation of adequate internal financial control and compliance with the policies and procedures approved by the company with the objective of regular and efficient business conduct, protection of company assets, prevention and detection of fraud for the accuracy and completeness of accounting data and the timely preparation of reliable financial information.

Law 25/2018 “On Accounting and Financial Statements”, SKK, IFRS, Law No. 10091 dated 05.03.2009 “On Legal Audit, Organization of the Profession of Legal Auditor and Approved Accountant” and Law No. 9920, dated 19.05.2008 “On Tax Procedures in the Republic of Albania”: The auditor’s report must demonstrate the adequacy and operational effectiveness of the Company’s internal financial controls

Law No. 9901 dated 14.04.2008 “On Traders and Commercial Companies” (Amended): The Board of Directors’ report of all companies to state the details in respect of adequacy of internal financial controls with reference to the “financial statements”.

Internal Control over Financial Reporting ('ICFR')

ICFR may be defined as a process designed by, or under the supervision of, the company’s principal executive (CEO) and principal financial officers (CFO), or persons performing similar functions and effected by the company’s Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the generally accepted accounting principles and includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
Provide reasonable assurance that transactions are recorded as necessary, to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of the Board of Directors and management of the company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

The above definition of ICFR includes the controls that ensure ‘effectiveness and efficiency’ of a company’s operations and ‘compliance with applicable laws and regulations’ to the extent that those directly relate to the preparation of financial statements.

Frashëri Firm & Partners is open to provides a one stop solution for all your IFCR needs starting with devising Business Process Narratives (BPN), Risk Control Matrix (RCM) & establishing Test of Controls (TOC) for each business process. We also evaluate the existing BPN, RCM & TOC, as per the requirement.