Extract from CARO
(vii) in the case of listed companies and/or other companies having a paid-up capital and reserves exceeding Rs.50 lakhs as at the commencement of the financial year concerned, or having an average annual turnover exceeding five crore rupees for a period of three consecutive financial years immediately preceding the financial year concerned, whether the company has an internal audit
system commensurate with its size and nature of its business;
Does this statement mean that CARO is applicable to all listed companies and other companies have to fulfill the conditions given above ?
All companies have to fulfill the conditions given above?
The Applicability of Internal Audit, no where mentioned in the Companies act, 1956, but it is only a requirement of CARO, 2003 on which the statutory auditor (s) of those companies on which the CARO ,2003 is applicable is required to give the disclosure in his report about the compliance of the Internal Audit as required by the para VII of the said Order, hence non compliance of the said requirement by the company would be a qualification in the auditors report.
Now, from the above it is very clear that the requirement of Internal Audit is applicable on those companies on which the CARO, 2003 is applicable.
Sorry i m not agree as the disagreement with every clause in CARO not resulted in qulification. It just inquiry abt some point which can not affect true & fair view. As implementation of internal audit is not affect true & fair view so not resulted in qulification.
I. As per section 581ZF of companies act 1956. INTERNAL AUDIT : Every Producer Company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Institute of Chartered Accountants Act, 1949 (38 of 1949)