Maintenance of Books of Accounts
Section 128 of the Companies Act 2013, provides for books of accounts etc, to be kept by the company. This provision came into force from 1st April, 2014. This section provides:
1. Every company shall prepare and keep at its registered office books of account and relevant books and paper and financial year which give a true and fair view of the state of affairs of the company, including that of its branch office or offices, if any
2. The company shall be in a position to explain the transactions effected both at the registered office and its branches.
3. Such books of accounts shall be kept on accrual basis and according to the double entry system of accounting.
Persons responsible for maintenance and penalty
The following persons are responsible for the maintenance of proper books of account:
1. The managing director, the whole time director in charge of finance. The Chief Finance Officer, or
2. Any other person of the company charged by the board.
If any person contravention provisions of this section they shall be punishable with
1. Fine which is not less than ₹50000 which may extend to ₹500000.
Laying of Financial Statements at Annual General Meeting
At every annual general meeting of a company, the Board of directors of the company shall lay before such meeting the financial statements for the financial year.
INTERNAL AUDITOR
An internal auditor (IA) is a company employee who evaluates an organization’s operations independently and objectively. They work on behalf of company management to ensure legal compliance, keep the company accountable, and educate staff and management on how the business can improve.
(a)the companies required to appoint internal auditor
- Every listed company.
- Every unlisted public company having:
1. paid up share capital of ₹50 crores or more during the preceding financial year, or
2. turnover of₹200 crores or more during the preceding financial year, or
3. outstanding loans or borrowings from banks or public financial institutions exceeding ₹100 crores or more at any point of time during the preceding financial year, or
4. outstanding deposits of ₹25 crores or more at any point of time during the preceding financial year and
- Every private company having
1. turnover of₹200 crores or more during the preceding financial year, or
2. outstanding loans or borrowings from banks or public financial institutions exceeding ₹100 crores or more at any point of time during the preceding financial year, or
BENEFITS OF INTERNAL AUDITOR
Many companies choose to employ an internal auditor, despite not being legally obligated to do so. Robust internal audits are viewed as a key way to correct issues quickly, maintain a good reputation, and prevent money from being wasted. Reports filed by internal auditors (IA) can help companies to prosper and operate at maximum efficiency. For this reason, many executives view them as a necessary expense.
CONCLUSIONS
Companies appoint Chartered Accountants (CAs) or other qualified professionals, such as those with a Certified Internal Auditor (CIA) certification, to conduct internal audits to help ensure strong internal controls, compliance with regulations, and protection of stakeholders’ interests.
An internal audit is a crucial safeguard for any organization. They assess the business’s performance independently and objectively, evaluating its operations and controls. Here’s why appointing one is important: Stronger Risk Management: Internal auditors identify and assess risks that could obstruct your goals.
It is beneficial to get the audited done by Chartered Accountant or a Cost Accountant.
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