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Applicability of Internal Audit - Companies Act 2013

Section 138 read with Rule 13 of the Companies (Accounts) Rules 2014, provides for internal audit in specified companies. The following companies shall be required to appoint an internal auditor-

(a) Every listed company;

(b) Every unlisted public company if satisfy any of the criteria given as under-

  • paid-up share capital of fifty crore rupees or more during the preceding financial year
  • turnover of two hundred crore rupees or more during the preceding financial year
  • 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
  • outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year; and

(c) Every private company if satisfy any of the criteria given as under-

  • turnover of two hundred crore rupees or more during the preceding financial year; or
  • 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:

Related

Draft of resolution for appointment of internal auditor

Frequently asked questions (FAQs)

(i) Internal Auditor shall either be a Chartered Accountant (CA), Cost Accountant (CWA), or such other professional as may be prescribed by the board of the company.

(ii) Internal auditor may or may not be the employee of the Company.

Default in complying with provisions of section 138 of the Companies Act, 2013 shall be punishable with a fine which shall not be less than five thousand rupees but which may extend to twenty-five thousand rupees for every day during which the default continues.


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CA Rupali Gupta

CA Rupali Gupta