Internal Audit
Such
class or classes of companies shall be required to appoint an internal
auditor, who shall either be a chartered accountant or a cost accountant, or
such other professional as may be decided by the Board to conduct internal
audit of the functions and activities of the company.
(2) The Central Government may, by
rules, prescribe the manner and the intervals in which the internal audit shall
be conducted and reported to the Board.
Companies Required to Appoint
Internal Auditor
(1) The following class of companies shall be required to
appoint an internal auditor which may be either an individual or
a partnership firm or a body corporate, namely:
(a) every listed company;
(b) every unlisted public company having-
(i) paid up share capital of fifty crore rupees or more
during the preceding financial year; or
(ii) turnover of two hundred crore rupees or more during
the preceding financial year; or
(iii) outstanding loans or borrowings from banks or public
financial institutions exceeding one hundred crore rupees or more at any point
of time during the preceding financial year; or
(iv) outstanding deposits of twenty-five crore rupees or
more at any point of time during the preceding financial year; and
(c) every private company having-
(i) turnover of two hundred crore rupees or more during
the preceding financial year; or
(ii) outstanding loans or borrowings from banks or public
financial institutions exceeding one hundred crore rupees or more at any point
of time during the preceding financial year:
Provided that an existing company covered under any of the
above criteria shall comply with the requirements of section 138 and
this rule within six months of commencement of such section.
Explanation- For the purposes of this rule –
(i) the internal auditor may or may not be an employee of
the company;
(ii) the term “Chartered Accountant” or “Cost Accountant”
shall mean a “Chartered Accountant” or a “Cost Accountant”, as the case may be,
whether engaged in practice or not’.
(2) The Audit Committee of the company or the Board shall,
in consultation with the Internal Auditor, formulate the scope, functioning,
periodicity and methodology for conducting the internal audit.
DISCLAIMER: THE ARTICLE IS BASED ON
THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE
PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT
FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
THE AUTHOR – CS DEEPAK
SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN BE
REACHED AT CONTACTHHPRO@GMAIL.COM OR 9910248911.
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