{"id":22037,"date":"2019-07-18T21:00:18","date_gmt":"2019-07-18T15:30:18","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=22037"},"modified":"2022-09-05T16:14:44","modified_gmt":"2022-09-05T10:44:44","slug":"an-internal-auditor-why-are-they-important-in-a-company","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/an-internal-auditor-why-are-they-important-in-a-company\/","title":{"rendered":"An Internal Auditor: Why are they important in a Company?"},"content":{"rendered":"

Internal Audit<\/a> is an Independent function carried out by the Internal auditor which involves the risk management, continuous monitoring, accounting<\/a>, Corporate Governance depending upon the functionality of the Company. The Audit itself suggests improvement to be carried out or to add value to strengthen the functionality of the Company.<\/p>\n

It ensures that the Company has done proper Compliance with respect to laws, regulations and to maintain the transparency in the Company.<\/p>\n

Applicability for Appointment of Internal Auditor for Conducting an Internal Audit<\/h2>\n

The following class of Companies required appointing the Internal Auditor of the Company:<\/p>\n\n\n\n\n\n\n\n
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 <\/strong><\/p>\n

 <\/strong><\/p>\n

 <\/strong><\/p>\n

 <\/strong><\/p>\n

 <\/strong><\/p>\n

Applicability of Internal Audit<\/strong><\/p><\/td>\n

Every Listed Company<\/strong><\/td>\nPrivate Company<\/strong><\/td>\nEvery Unlisted Public Company<\/strong><\/td>\n<\/tr>\n
It does not have any specific criteria applies to all listed Companies.<\/td>\nTurnover of Rs. 200 crore or more during the preceding financial year or<\/td>\nPaid up share Capital of Rs 50 crore or more during the preceding financial year or<\/td>\n<\/tr>\n
 <\/strong><\/td>\nOutstanding loans or borrowings from banks or public financial institutions exceeding Rs 100 crore or more at any point of time during the preceding Financial year.<\/td>\nOutstanding loans or borrowings from banks or public financial institutions exceeding Rs 100 crore or more at any point of time during the preceding Financial year or<\/td>\n<\/tr>\n
 <\/strong><\/td>\n <\/strong><\/td>\nTurnover of Rs. 200 crore or more during the preceding financial year or<\/td>\n<\/tr>\n
 <\/strong><\/td>\n <\/strong><\/td>\nOutstanding deposits of Rs 25 crore or more at any point of time during the preceding financial year<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/strong><\/p>\n

If the existing Company covered under any of the above criteria shall be required to appoint the Internal Auditor of the Company.<\/p>\n

Who can be an Internal Auditor of the Company?<\/h2>\n

Internal Auditor can be Individual, Body corporate or partnership firm.<\/p>\n

    \n
  1. Internal Auditor may or may not be an employee of the Company.<\/li>\n
  2. Internal Auditor can be a Chartered Accountant or Cost Accountant whether engaged in practice or not or such other professional as may be decided by the Board.<\/li>\n<\/ol>\n

    \"Internal<\/p>\n

    Scope of Internal Audit<\/h2>\n

    Under section 138(2) of the Companies Act, 2013<\/strong><\/a> gives power to the central Government to make rules and prescribed the manner and the intervals in which the internal audit shall be conducted and reported to the Board.<\/p>\n

    In rule 13 of Companies (Account) Rules, 2014 the scope of internal audit is not defined. However 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.<\/p>\n

    What is the Main Purpose of Internal Audit?<\/h2>\n

    It is advisable to carry out the Internal Audit<\/a> on quarterly basis<\/a> so that the Company can monitored its compliance properly and to analyze there is no fraud or deviation in the Company.<\/p>\n

    \"Internal<\/p>\n

    The Internal Auditor prepare the report mentioning the compliances and deviations if it found any deviations the method should be mention to rectify. The report should be carry out in fair and transparent manner.Internal Auditor analyses that compliance are timely done. The Audit should carry out in fair and transparent manner.<\/p>\n

    Areas of Internal Audit to be Carried Out<\/h2>\n