Below we have described requirement of the Internal audit as per Companies Act 2013. Extract of the rule 13 of Companies Act 2013 of section 138 is as follows:
Internal audit as per Companies Act 2013
(1) The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors, namely:-
(a) Every listed company; Always applicable
(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(income) 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:
Thus above are requirements of Internal audit as per Companies Act 2013.
Explanation.- For the purposes of this rule – The internal auditor may or may not be an employee of the company; 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.
However, the rule specifies that an internal auditor may or may not be an employee of the company. The Internal auditor may be a CA/CWA or any other professional. And also neither the rules nor the Act, has specified the duties and responsibilities. So even if the rules and act made the appointment of Internal Auditor mandatory, the same rules and Act provides option to companies to appoint any person as internal auditors. And also any one who has the knowledge can became an Internal Auditor, because the rules did not define the word “any other professional”
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