INTERNAL AUDITOR

APPLICABLE PROVISIONS: As per section 138 of the companies act 2013 and rule 13 of companies (accounts) rules,2014

ACCORDING TO SECTION 138(1) OF THE COMPANIES ACT, 2013:

*Such class or classes of companies as may be prescribed 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.

ACCORDING TO RULE 13 OF COMPANIES(ACCOUNTS) RULES, 2014:

*The following class of companies are required to appoint an internal auditor which may be either an individual or a partnership firm or a body corporate

(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

 WHO CAN BE AN INTERNAL AUDITOR?

1. A Chartered Accountant whether in practice or not, or
2. A Cost Accountant whether in practice or not, or
3. Such professional as may be decided by the board to conduct internal audit.

WHAT IS THE PROCEDURE TO APPOINT INTERNAL AUDITOR FOR THE COMPANY?

1. Prepare notice of board meeting along with draft resolution(s) to be passed in the board meeting for consideration for appointment as Internal Auditor and consent letter from the proposed Internal Auditor.
2. Obtaining consent letter.
3. Issuing 7 days' notice for calling a board meeting for appointment of internal auditor.
4. Hold board meeting and appoint internal auditor. Inform the auditor about his appointment as an internal auditor of the company.
5. Convey Outcome of Board Meeting to Stock exchange wherever company’s securities are listed within 30 minutes from the conclusion of meeting.  (Applicable for listed companies only)

• Filing form MGT-14 for appointment of internal auditor within 30 days of passing board resolution.

Further as per SEC – 179(3) POWERS OF THE BOARD & 117(3) RESOLUTIONS AND AGREEMENTS TO BE FILED– Appointment of internal auditors by the BOD and filing of Form MGT – 14 with ROC. (Not Applicable to Private Limited Company)

 Subject to Exemption to Private Companies under Companies Act, 2013

(Notification GSR 464(E) dated 05.06.2015 and consolidation of all subsequent notifications)