Section 138 of the Companies Act, 2013, deals with the provisions relating to Internal Audit:

(i) Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.

(ii) The Central Government may, by rules, prescribed the manner and the intervals in which the internal audit shall be conducted and reported to the Board.

Rule 13 of the Companies (Accounts) Rules, 2014 provide that following class of companies shall be required to appoint an internal auditor or a firm of internal auditor:


(a) every listed company


(b) every unlisted public company having;


(i) paid up share capital of 50 crores or more during the preceding financial year; or

(ii) turnover of 200 or more during the preceding financial year; or


(iii) outstanding loans or borrowings from banks or public financial institutions exceeding 100 crore or more at any point of time during the preceding financial year; or (iv) which has accepted deposits of 25 crore or more at any point of time during the last financial year; and.


(c) every private company having


(i) turnover of two hundred crore rupees or more during the preceding financial year; or

(ii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred 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.

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