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Internal Auditor

Sachin C (Tax Consultant) (107 Points)

09 January 2019

Can a private limited company be acting as an Internal auditor or conduct financial due diligence ?

Thanks in advance.

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Yash Lahoti (101 Points)
Replied 09 January 2019

A private company cannot act as an Internal Auditor as per section 138 of the companies act and respective rules. However, for independent financial due diligence (not mentioned under the Companies Act) a private company can be appointed.

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Sachin C (Tax Consultant) (107 Points)
Replied 09 January 2019

Thanks Yash... But just one more doubt it says that any other professional as per section 138 and the same is no where defined whether such professional can be a body corporate or company or firm type of constitution....?

Yash Lahoti (101 Points)
Replied 09 January 2019

Hi. As per the notification (MCA-Noticfication no. 742(E) -dt.-27.07.2016 Cos-Acc.-Amendmnt-Rules-2016), a body corporate can be an internal auditor under section 138. Refer to clause 4 of this notification which amends principle rule 13. An individual, partnership firm or a body corporate can be an internal auditor. Since a private company cannot be a body corporate it cannot be an internal auditor.