13 Companies Required to Appoint Internal Auditor

(1) The following class of companies shall be required to appoint an internal auditor ¹[which may be either an individual or a partnership firm or a body corporate], namely:-

(a) every listed company;

(b) every unlisted public company having-

(i) paid up share capital of fifty crore rupees or more during the preceding financial year; or

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

(iii) 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; or

(iv) outstanding deposits of twenty five crore rupees or more at any point of time during the preceding 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.

Explanation.- For the purposes of this rule –

(i) the internal auditor may or may not be an employee of the company;

²[(ii) the term “Chartered Accountant” or “Cost Accountant” shall mean a “Chartered Accountant” or a “Cost Accountant”, as the case may be, whether engaged in practice or not’.]

(2) The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.

Amendments

1. Substituted by the Notification Dated 27th July, 2016.

In rule 13 of the principal rules, in sub-rule (1),- (a) in the opening portion, the words “or a firm of internal auditors”, the words “which may be either an individual or a partnership firm or a body corporate” shall be substituted;

2. Substituted by the Notification Dated 27th July, 2016.

In the Explanation, for item;

'(ii) the term "Chartered Accountant" shall mean a Chartered Accountant whether engaged in practice or not.'

the following item shall be substituted, namely:

'(ii) the term “Chartered Accountant” or “Cost Accountant” shall mean a “Chartered Accountant” or a “Cost Accountant”, as the case may be, whether engaged in practice or not’.