valid as on 20/08/2019

Section 138. Internal audit
Effective from 01-04-2014

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

(2) 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.

This section shall apply to IFSC Public Company and IFSC Private Company if the articles of the company provides for the same vide GSR 8(E)and GSR 9(E) dated 04.01.2017.To view the notification Click Here
Refer rule 13 of the Companies (Accounts) Rules, 2014.To view the rule,Click Here
Chartered Accountant means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act
2(28) Cost Accountant, means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act;

9.1.13- Companies (Accounts) Rules, 2014

13. Companies required to appoint internal auditor.-

(1) The following class of companies shall be required to appoint an internal auditor or a firm of internal auditors  , 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;

(ii) the term “Chartered Accountant” shall mean a Chartered Accountant 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.

Substituted vide notification dated 27.07.2016, Companies (Accounts) Amendment Rules, 2016. To view the notification,Click Here
Substituted vide notification dated 27.07.2016, Companies (Accounts) Amendment Rules, 2016. To view the notification,Click Here

Companies (Accounts) Amendment Rules, 2016 [GSR 742(E)] dated 27/07/2016


Enforcement Notification S.O. 902(E) dated 26/03/2014


Exemption to Specified IFSC Private company [GSR 09(E)] dated 04/01/2017


Exemption to Specified IFSC Public company [GSR 08(E)] dated 04/01/2017


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