Quick Summary
Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations by evaluating risk management, control, and governance.
Internal Audit is mandated for certain companies under Section 138 of the Companies Act, 2013. It helps management in reviewing systems, controls, and processes to ensure efficiency and compliance.
Applicability
- Listed companies
- Unlisted public companies with: Paid-up capital ≥ ₹50 crores OR Turnover ≥ ₹200 crores OR Outstanding loans/borrowings ≥ ₹100 crores
- Private companies with: Turnover ≥ ₹200 crores OR Outstanding loans/borrowings ≥ ₹100 crores
Internal Auditor
- Chartered Accountant
- Cost Accountant
- Such other professional as decided by Board
- Can be employee of company or external firm
Scope
- Evaluate internal controls
- Review compliance with policies and laws
- Assess risk management processes
- Safeguarding of assets
- Check for fraud and irregularities
- Value for money analysis
Reporting
- Internal Auditor reports to Management/Audit Committee
- Periodic reports on findings and recommendations
- Follow-up on implementation of recommendations
Key Points
- Internal control evaluation
- Mandatory for listed and large companies
- Can be CA, CMA, or other professional
- Reports to Audit Committee
- Focus on risk management and controls