Internal audit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 October 2010 When is internal audit required & when is it necessary?Can a previous internal auditor be appointed as a statutory auditor

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

18 October 2010 In the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs. 50 lakhs as at the commencement of the financial year concerned, or having and average annual turn over exceeding five crores rupees for a period of three consecutive financial year immediately preceding the financial year concerned, the company should have an internal audit system commensurate with its size and nature of its business.

Internal auditor could become statutory auditor but cannot hold both posts at one time.

CA. Chikkerur C R

CA. Chikkerur C R (Expert)
Follow

18 October 2010 If its company - then when CARO applies, even Internal audit applies. Condition is if company is having 50 lak paid up+reserve or 8 crore turnover or 25 lak outstanding loan.

For others - Its only option to management

No restriction on appointing previous internal auditor as Statutory. However he cannot play both roles in same year for same company

Guest

Guest (Expert)

19 October 2010 Appointment of internal auditor.

The appointment of the internal auditor is prerogative of the management as it is entirely
depends on the wishes of the managements of corporate or non-corporate organisation
whether to have its own internal auditor or not.

However,

after the enactment of the CARO,2003 it is obligatory on the part of the companies
to have internal auditing in terms of paragraph 4(vii) of the said order

which is reproduced below :

In the case of listed companies and/or other companies having a paid-up capital and

reserves exceeding Rs.50 lakhs as at the commencement of the financial year concerned, or

having an average annual turnover exceeding five crores rupees for a period of three consecutive

financial years immediately preceding the financial year concerned, whether the company has an

internal audit system commensurate with its size and nature of its business.

Sec.227(4A) - Duty under CARO,2003

The central govt has the power to direct by a general or special order that, in the case of
specified companies, the statutory auditor's report shall include a statement of such matters
as may be specified in its order.

CARO,2003

Issued by the Central govt. of india in terms of sub sec.(4A) of sec.227
of the companies act,1956.

So, sec.227(4A) says

it is mandatory for all companies to appoint internal auditor, IF CARO,2003 IS APPLICABLE.

Regards

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now