Vrindavan Mithai Wala Ltd, a listed company, has long been a popular name in the retail stores and restaurants. With an expansive footprint of retail stores and restaurants across the country, the brand became synonymous

CS Professional · Environmental, Social and Governance (ESG) Principles and Practice · PYQS · June 2026
Vrindavan Mithai Wala Ltd, a listed company, has long been a popular name in the retail stores and restaurants. With an expansive footprint of retail stores and restaurants across the country, the brand became synonymous with quality and consumer trust. Building on this established brand equity, the Board of Directors approved a capital-intensive diversification strategy transitioning from sweets and restaurants into the full-scale hospitality sector. This culminated in the launch of a premium hotel wing under the group's popular flagship brand. The transition from high-volume food retail to complex hotel management presented immediate structural challenges. While the initial phase of hotel operations appeared to stabilize, the Company's internal control oversight failed to keep pace with the specialized regulatory requirements of the hospitality industry. Following a surprise survey conducted by Government authorities, several critical deficiencies were identified in the Company's management practices, like non-compliances with FSSAI regulations, waste management, child labour, labour laws, PF & ESI Acts. The Company was levied substantial regulatory fines that directly impacted its profitability. News of the environmental and other non-compliances were reported by the media, causing a sharp decline in share price and brand goodwill. Plans for further expansion into the hospitality sector were immediately suspended as the management shifted its focus toward damage control and risk mitigation. In the wake of these losses, the executive management embarked on a comprehensive study of corporate risks and review of internal control system by internal audit function. It also considered a detailed risk analysis to address the existing issues and recommend further course of action. The internal audit department was entrusted with assessment of operational non-compliances and to recommend remediations thereof. The internal audit manager prepared a detailed programme in light of the main risks identified by the Company. Based on the above answer the following questions: Outline the specific responsibilities and duties of internal auditors.

Answer & Explanation:

The Internal auditors play an important role in evaluating and improving the effectiveness of an organization's governance, risk management and internal control processes. Their primary objective is to provide independent and objective assurance to management and the Board. The Internal Auditor assesses the operation of internal control system and makes recommendations to improve it. The key responsibilities and duties of internal auditors are given as under: Evaluating risk management activities within the organization. Determining the organization's compliance with relevant laws and regulations. Evaluating and making recommendations that can assist in improving internal control. Investigating fraud via a fraud risk assessment that uses fraud deterrence principles. Offering an objective source of independent advice to help reach the goal and achieve legality and validity. Performing audit assignments assigned to them. Learning and studying the organization's policy and guidelines. Identifying audit scope and developing annual plans within the organization. Gathering, analyzing, evaluating, and presenting accounting documentation, reports, data, and flowcharts. Following up the audits to monitor the managements' intervention. Promoting ethics and identifying improper conduct within the company. Internal auditors serve as an independent assurance function that assists management and the Board in achieving organizational objectives by evaluating and improving the effectiveness of governance, risk management and internal control processes. They contribute significantly to transparency, accountability and operational excellence.

Topics: Internal Audit

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic