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Internal audit query

vivek tapdiya (Practice) (34 Points)

11 March 2014

What are the consequences of Non Compliance of internal audit applicable to private limited companies???

is there any penalty for non compliance ?

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8 Replies

Manoj Mehta (Head Of Department (Accounts & Finance)) (1479 Points)
Replied 11 March 2014

Dear internal audit is a compliance of standard of auditing and it is done to check the internal control of the company. They have to see all the areas including the statutory areas too. I there is no such penalty for the same but internal audit increase the relianility of your financial accounts. I hope ans is clear to you regards

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Anjan (Chartered Accountant) (69 Points)
Replied 11 March 2014

Dear Vivek,

Internal Audit is a requirement of CARO,2003. the auditor should report whether the company has an internal audit system commensurate with its size and nature of business.Non Complaince of CARO requirements would be qualification in auditors report.

CARO is exempted to private limited companies provided it should satisfies the conditions specified.

In your case, you need check whether the Private limited company is satisfying the conditins specied in CARO. If not, Internal audit is applicable to that company

Vivek Khakhkhar (Assistant Audit Manager) (201 Points)
Replied 12 March 2014

Dear Vivek, Internal Audit is required as per CARO 2003. So carefully study it. Also check the applicability of CARO 2003 to the company. As per CARO 2003 auditor has to mention that whether company has an internal audit system commensurate with its size & nature of its business. If company does not have internal audit system then only reporting is done as per CARO 2003. It is not mandatory by law. It is for proper internal control in company.

CA Ganesh Agarwala (Audit Senior Manager) (239 Points)
Replied 12 March 2014

dear friend ,

intenal audit is mandated by CARO 2003 for cetain class of companies. if a company doesnot conduct intenal audit as per CARO requirement, i think it will attract penalty under section 621A which is a general penalty section in companies act....

regards

ganesh agarwal

Sanjay Kumar Rana (Paid Assistant) (57 Points)
Replied 12 March 2014

Its simple your statutory auditor will qualify his report and may ask the reason for not appoiting internal auditor as per caro

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sanjeev (FCA) (46 Points)
Replied 18 April 2014

can internal auditor do job for maintenance of books of accounts

Vivek Khakhkhar (Assistant Audit Manager) (201 Points)
Replied 18 April 2014

Dear Sir, I think, person who provides audit services should not provide non audit services like maintenance of books of accounts. Still get more replies from others.