Friday, August 21, 2009

RE- ORIENTATION OF INTERNAL AUDIT IN ORDNANCE FACTORIES

In the current competitive environment, when the ordnance factories are facing competition from domestic and foreign players, Internal Audit has to play a major role for highlighting the areas where the cost and financial saving could be effected. Moreover audit has to be transparent and effective and focus on risk-areas' control and governance functions. Thus a need was felt to move away from the organizational structure based on geographical considerations and to an internal – audit structure based on economic fundamentals.

Ordnance factories are now classified into five groups based on certain objective functions, viz. Metallurgical and Component (M&C) Division, Weapons, Vehicles & Engineering (W, V & E ) Division, Ammunition & Explosives (A&E) Division, Armoured Vehicles (AV) Division and Ordnance Equipment (OE) Division. The compulsions of each group are at variance with the other group. The budget requirement, nature of investment, nature of operations carried out, nature of procurement and issues to various indentors are different for various groups.
On the initiatives taken by HQ office, Internal Audit cells have been organized based on operating groups to enable execution of internal audit in a co-ordinated manner within the group and to enable factory internal audit focus on important risk, control and governance issues to generate cost and financial savings.

Independence of Inrernal Audit from IFAs
Based on initiatives taken by our department, the C&AG issued a policy directive to MoD for organizing separation of internal audit from IFA’s role at factory and board (OFB) level and for replicating these arrangements in all areas of defence sector of country. On the side of defence production, chief internal auditor will now act independently of Member (Fin) OFB and will report to CGDA to ensure effectiveness of internal audit. Separation of internal audit from financial advise/payment role has certain implications for organisation’s existing structure and functioning in area of Army. Navy and Air Force etc. To examine these implications and to suggest appropriate measures in this regard, an internal committee of officers in HQ office has been constituted. Re-organisation of internal audit structure is likely to result in re-orientation of audit with change in perspective from micro to macro and from transaction audit to systems audit.

Website of CDA (Funds)
The website of CDA (Funds) Meerut was inaugurated by the CGDA on 14th July, 2009. Its address is : http://cdafunds.nic.in/. It will soon be converted into an interactive website. It will improve our quality of service to defence civilian GPF subscribers tremendously.

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