Section 138 of the Act provides that such class or classes of companies as may be prescribed shall be required to appoint an internal auditor. Such internal auditor shall be appointed by the board and may be a chartered accountant or cost accountant or or such other professional as may be decided by the board.
Following class of companies are covered for internal audit
1. Listed Company
2. Unlisted company having paid up share capital of Rs. 50 crores or more or turnover Rs. 200 crores or more or outstanding loans or borrowings from the banks or public financial institutions exceeding Rs. 100 crores or more or outstanding deposits of Rs. 25 crores or more during the preceding FY.
3. Private company having turnover Rs. 200 crores or more or outstanding loans or borrowings from the banks or public financial institutions exceeding Rs. 100 crores or more or outstanding deposits of Rs. 25 crores or more during the preceding FY.
Existing company shall comply these provisions within a period of 6 months.
The internal auditor may or may not be the employee of the company.
Audit committee and BOD in consultation with Internal Auditor shall formulate the scope, functioning, periodicity and methodology for conducting internal audit.
