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CARO - Internal Audit Clause

chintz (CA Final ) (129 Points)

13 November 2009

Extract from CARO
(vii) 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 crore 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;

Does this statement mean that CARO is applicable to all listed companies and other companies have to fulfill the conditions given above ?

OR

All companies have to fulfill the conditions given above?

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11 Replies

chintz (CA Final ) (129 Points)
Replied 13 November 2009

This clause is applicable to all listed companies irrespective of the size and turnover.
Non listed companies had to satisfy the conditions so as to attract the applicability of this clause.

By B.Chakrapani warrier in Query section.

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(Guest)

thanks:)

(Guest)

thanks:)

hemal (CA FINAL) (176 Points)
Replied 14 November 2009

For applicability plz find the condition from books. However CARO nt compulser internal audit to any company, it just ask abt the internal audit is implemented or not.

NAQSH GARG (Practice) (26 Points)
Replied 17 November 2009

The Applicability of Internal Audit, no where mentioned in the Companies act, 1956, but it is only a requirement of CARO, 2003 on which the statutory auditor (s) of those companies on which the CARO ,2003 is applicable is required to give the disclosure in his report about the compliance of the Internal Audit as required by the para VII of the said Order, hence non compliance of the said requirement by the company would be a qualification in the auditors report.

Now, from the above it is very clear that the requirement of Internal Audit is applicable on those companies on which the CARO, 2003 is applicable.

CA. Bal Mukund Chaturvedi

New Delhi.

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hemal (CA FINAL) (176 Points)
Replied 18 November 2009

Sorry i m not agree as the disagreement with every clause in CARO not resulted in qulification. It just inquiry abt some point which can not affect true & fair view. As implementation of internal audit is not affect true & fair view so not resulted in qulification.

Deepak (Student) (127 Points)
Replied 27 November 2009

100% agree with Garg!

Heena (Article) (25 Points)
Replied 06 February 2012

Hi....I want all details about Internal Audit that is useful for practical use

VARUN.C.DAS (Chartered Accountant ) (356 Points)
Replied 06 April 2012

I. As per section 581ZF of companies act 1956. INTERNAL AUDIT : Every Producer Company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Institute of Chartered Accountants Act, 1949 (38 of 1949)

CA Shravan Kumar (Chartered Accountant) (52 Points)
Replied 19 August 2012

Is it true that newly formed unlisted compant having paid-up capital not exceeding 50 lakh rupees but having turnover more than 5 crore rupees need not implement intenal audit for initial 3 F.Y ?