Applicability of Internal Audit


Section 138 of the Companies Act, 2013 read with Rule 13 of Companies (Accounts) Rules, 2014 requires the following classes of Companies to appoint an Internal Auditor, who shall either be a Chartered Accountant, 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:



  • every listed company

  • every unlisted public company having
    • paid up share capital of fifty crore rupees or more during the preceding financial year; or
    • turnover of two hundred crore rupees or more during the preceding financial year; or
    • 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
    • outstanding deposits of twenty five crore rupees or more at any point of time during the preceding financial year;

  • every private company having
    • turnover of two hundred crore rupees or more during the preceding financial year, or
    • o 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.


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

Therefore, the companies which fulfil the criteria mentioned above should mandatorily comply with the provisions of Section 138 and should appoint an Internal Auditor.



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