An effective internal audit plays a key role in evaluating and enhancing the effectiveness of risk management, control, and governance processes within an organization. More businesses are now leveraging internal audit as a strategic resource, recognizing that internal auditors offer valuable insights into operations, risks, and potential opportunities, all of which are crucial for informed business decision-making.
Every organization faces fraud risks, and numerous cases have shown how fraud can tarnish the reputation of an entire business. With increasing regulatory scrutiny and the far-reaching negative impact of fraud, senior management and executives are becoming more concerned about the vulnerability of their businesses to fraud and whether adequate protections are in place.
This growing concern underscores the vital role of internal audit in fraud risk management, helping organizations proactively identify risks and implement controls to safeguard their operations.
Mandatory Requirement for Internal Audit in India
Section 138 of the Act was enforced with effect from 1st April 2014. As per section 138 of the Companies Act, 2013, such class or classes of companies as may be prescribed shall be required to appoint an internal auditor to conduct internal audit functions and activities of the company. Accordingly, such class or classes of companies have been prescribed in Companies (Accounts) Rules, 2014 by Ministry of Corporate Affairs. The following class of companies shall be required to appoint an internal auditor namely,
- Listed companies: – Appointment of an internal auditor is mandatory
- Unlisted public company and private companies: – Appointment of an internal auditor is mandatory if either of the following criteria are met
| Criteria* | Unlisted Public Companies | Private Companies |
|---|---|---|
| Paid-up share capital | INR 500 million (50 crore) or more | Not a determining factor |
| Turnover | INR 2 billion (200 crore) or more | INR 1 billion (100 crore) or more |
| Outstanding loans or borrowings from banks or public financial institutions | INR 1 billion (100 crore) or more | INR 2 billion (200 crore) or more |
| Outstanding deposits | INR 250 million (25 crore) or more | Not a determining factor |
*To be checked for the preceding financial year
However, a company can also on sole discretion opt for internal audit even if it does not qualify for the mandatory requirements due to several benefits stated above.
Our audit methodology includes making recommendations for improvement, not just to express numbers and ensure compliances. The recommendations are realistic because we want you to implement them. We also ensure our clients are updated all around the year of accounting, financial and regulatory developments that may impact their business. Working in the capacity of an internal auditor, we provide following services:
- Risk Assessment and development of risk based audit plan;
- Evaluating the adequacy of the system of internal controls;
- Recommend improvements in controls;
- Assess compliance with policies and procedures and sound business practices;
- Assess and ensure compliance with legal and contractual obligations.
- Review operations/programs to ascertain whether results are consistent with established objectives and whether the operations/programs are being carried out as planned.
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