Section 138 read with Rule 13 of The Companies (Accounts) Rules, 2014 (Chapter 9).
The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors, namely:- (a) Every listed company;
(b) Every unlisted public company having- (i) paid up share capital of 50 crore rupees or more during the preceding financial year; or (ii) turnover of 200 crore rupees or more during the preceding financial year; or (iii) outstanding loans or borrowings from banks or public financial institutions exceeding 100 crore rupees or more at any point of time during the preceding financial year; or (iv) outstanding deposits of 25 crore rupees or more at any point of time during the preceding financial year; and
(c) Every private company having-
(i) turnover of 200 crore rupees or more during the preceding financial year; or (ii)outstanding loans or borrowings from banks or public financial institutions exceeding 100 crore rupees or more at any point of time during the preceding financial year:
Provided that an existing company covered under any of the above criteria shall comply with the requirements of section 138 and this rule within six months of commencement of such section.
Explanation.- For the purposes of this rule – (i) the internal auditor may or may not be an employee of the company; (ii) the term “Chartered Accountant” shall mean a Chartered Accountant whether engaged in practice or not.
(2) The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit
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