Avail 50% discount on All CS & CMA subjects for Dec batch . Use coupon code Dec14

×

Please Wait ..

Sign-in to your account


Username:
Password:

Remember Me

Forgot your password?

Sign-up now



Join CAclubindia.com and Share your Knowledge. Registered members get a chance to interact at Forum, Ask Query, Comment etc.


Discussion > Corporate Law >

Internal Audit

    Post New Topic
Pages : 1 2





CA and CS Final B.Com University First


[ Scorecard : 186]
Posted On 11 May 2010 at 06:43 Report Abuse

When is Internal audit requirement mandatory in case of a Private Limited Company as per Companies Act 1956?

Thank you


Online classes for CA CS CMA



Prejith
Pursuing CA


[ Scorecard : 92]
Posted On 11 May 2010 at 08:09

Internal audit is mandatory for closely held companies when:

a) the paid up capital and reserves exceed more than Rs 50L at the commencement of the concerned financial year.

b) the average turnover exceeds Rs 5Cr for 3consecutive years, preceding the concerned financial year.

If any of the above conditions are satisfied by a pvt limited company then internal audit is mandatory.



Total thanks : 1 times




Member (Account Deleted)
student


[ Scorecard : 1246]
Posted On 11 May 2010 at 08:49

Originally posted by : Prejith

Internal audit is mandatory for closely held companies when:

a) the paid up capital and reserves exceed more than Rs 50L at the commencement of the concerned financial year.

b) the average turnover exceeds Rs 5Cr for 3consecutive years, preceding the concerned financial year.

If any of the above conditions are satisfied by a pvt limited company then internal audit is mandatory.

 

agree with prejith.......



Total thanks : 1 times



CS Mayur Buha
Company Secretary


[ Scorecard : 238]
Posted On 11 May 2010 at 09:51

Can you tell me the section under which the internal audit is compulsory?



Total thanks : 1 times



Prejith
Pursuing CA


[ Scorecard : 92]
Posted On 11 May 2010 at 10:18

It's one of the clauses of CARO 2003 which is defined under section 227 (4A).

I'am not sure whether it has been defined at any other place or not.



Total thanks : 1 times



Ankur Garg
Company Secretary and Compliance Officer


[ Scorecard : 103863]
Posted On 11 May 2010 at 10:22

Originally posted by : CS Mayur Buha

Can you tell me the section under which the internal audit is compulsory?

 

No direct section in Companies Act, 1956 except an indirect reference through section 227(4A). 



Total thanks : 1 times



Kalpesh Chauhan,
Tax Assistant (Accounting Technician CA FINAL CS PROF. PROG. B.Com)


[ Scorecard : 8177]
Posted On 11 May 2010 at 16:12

If a Private Company commits any fault in any of the 3 above mentioned conditions regarding exemption from applicability of Companies (Auditor's Report) Order, 2003(section 227(4A), the particular Private company has to report on the matter regarding

Clause 4(vii)
which states that

"in 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 Rs.5 Crores for a period of three consecutive financial years immediatel preceeding the financial concerned, whether the company has an INTERNAL AUDIT SYSTEM commensurate with its size and nature of its business "




Total thanks : 1 times



Member (Account Deleted)


[ Scorecard : 347]
Posted On 12 May 2010 at 12:12

 

Appointment of internal auditor.            
                   
The appointment of the internal auditor is prerogative of the management as it is entirely    
depends on the wishes of the managements of corporate or non-corporate organisation     
whether to have its own internal auditor or not.          
                   
However,                  
                   
after the enactment of the CARO,2003 it is obligatory on the part of the companies    
to have internal auditing in terms of paragraph 4(vii) of the said order      
                   
which is reproduced below :              
                   
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 crores 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.      
                   
                   
Sec.227(4A) - Duty under CARO,2003            
                   
The central govt has the power to direct by a general or special order that, in the case of    
specified companies, the statutory auditor's report shall include a statement of such matters  
as may be specified in its order.              
                   
CARO,2003                
                   
  Issued by the Central govt. of india in terms of sub sec.(4A) of sec.227     
  of the companies act,1956.            
                   
So, sec.227(4A) says              
                   
  it is mandatory for all companies to appoint internal auditor, IF CARO,2003 IS APPLICABLE.
                   
Regards                  
                   
K.Ilayaraja                
                   



DALIP KUMAR
ARTICLESHIP TRAINING


[ Scorecard : 25]
Posted On 17 May 2010 at 16:06

What are the conditions for the applicability of CARO 2003 in case of CLOSELY HELD COMPANY




Prejith
Pursuing CA


[ Scorecard : 92]
Posted On 18 May 2010 at 12:14

CARO is applicable to closely held companies if:

A) The paid up capital and reserves of the company exceeds Rs. 50Lakhs,

B) The company has an oustanding loan from any bank or financial institution exceeding Rs. 25Lakhs, and

C) The total turnover exceeds Rs. 5Crore,

  At any time during the financial year.

If any of the above condition is not satisfied then CARO is not applicable.



There are 10 Replies to this message






Related Files








Related Threads


Post your reply for Internal Audit



Your are not logged in . Please login to post replies

Click here to login


Not a member yet ?? Click here to signup

Message







    

  • Use thank button to convey your appreciation.
  • Maintain professionalism while posting and replying to topics.
  • Try to add value with your each post.



Forum Home | Forum Portal | Member Control Center | Who is Where | Popular Threads | Today's Topic | Recent Posts | Today's Posts | Post New Topic | Thread With Files | Top Threads This Month | Forum Stats | Unreplied Threads

back to the top