INTERNAL AUDIT

​An effective internal audit is concerned with evaluating and improving the effectiveness of risk management, control and governance processes in an organization. Organizations are increasingly leveraging internal audit as a strategic resource, recognizing that internal auditors’ broad and deep perspective of operations, risks and potential opportunities can help inform business decision-making. All organisations are subject to fraud risks and there have been several instances when frauds have disgraced organisations as a whole. With increased regulatory focus and widespread negative impact of frauds, the managements and senior executives are increasingly concerned about the vulnerability and exposure of their businesses/ organisations to frauds and whether or not they are adequately protected. This emphasizes the need of internal audit in fraud risk management.

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Mandatory Requirement For Internal Audit In India​

Section 138 of the Act was enforced with effect from 1st April 2014. As per section 138 of the Companies Act, 2013, such class or classes of companies as may be prescribed shall be required to appoint an internal auditor to conduct internal audit functions and activities of the company. Accordingly such class or classes of companies have been prescribed in Companies (Accounts) Rules, 2014 by Ministry of Corporate Affairs. The following class of companies shall be required to appoint an internal auditor namely ,

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• Listed companies : –   Appointment of an internal auditor is mandatory

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• Unlisted public company and private companies : –   Appointment of an internal auditor is mandatory if either of the following criteria are met 

  • Turnover is equal to or more than Rs. 200 Crores​

  • Outstanding Loans & Advances anytime during the year crosses Rs. 100 Crores