22 December 2012
DEAR EXPERTS IT IS A UINQUE QUERY - PLEASE HELP & SOLVE ASAP.....
I WANT TO KNOW....WHETHER PRIVATE COS CAN OUTSOURCE THEIR INTERNAL AUDIT FUNCTION TO ANY OUTSIDE PERSON WHICH IS NOT A CA FIRM (AS THERE IS NO SUCH REQUIRING PROVISION TO APPOINT ONLY A CA FIRM)
CASE: -
A PRIVATE COMPANY DOES NOT EMPLOY ACCOUNTING STAFF DUE TO LACK OF SPACE & OFFICE IT OUTSOURCES ITS ACCOUNTS FUNCTION TO SOME OUTSIDE ACCOUNTANT WHO IS NOT A CA BUT RUNS HIS OWN ACCOUNT WRITING FIRM FOR VARIOUS PEOPLE....
1) CAN THIS ACCOUNTANT / ACCOUNT WRITING FIRM ALSO UNDERTAKE INTERNAL AUDIT OF SUCH PRIVATE CO.
2) IF NOT CAN THIS ACCOUNT WRITING FIRM UNDERTAKE INTERNAL AUDIT OF SOME OTHER PVT CO. FOR WHICH IT IS NOT WRITING ACCOUNTS
IS IT TRUE THAT FOR BEING AN INTERNAL AUDITOR OF A PRIVATE LTD CO. IT IS NOT NECESSARY FOR ONE TO BE A QUALIFIED CA....AND ONLY KNOWELDGE & EXPERIENCE OF AUDIT & ACCOUNTING FUNCTIONS & BUSINESS OF CLIENT IS MORETHAN ENOUGH IF BOARD DEEMS FIT?
THIS QUEST IS SPECIFICALLY FOR PRIVATE COS...& NOT PUBLIC COS (WHERE CA FIRM IS APPOINTED AS INTERNAL AUDITOR)....
22 December 2012
Dear Friend, There is nowhere specifically mentioned that the internal audit can not be done by the firm who has undertaken account writing assignment. However the same person carrying this assignment dilutes the efficiency and effectiveness of the Internal audit function.
With respect to person carrying the assignment of internal audit need not be an chartered accountant.
22 December 2012
Sir thank you so much for clearing my doubts... This doubt is cleared....... A private co which outsources its accounts writing function to a NON CA FIRM, can outsource its internal audit function also TO A NON CA FIRM...
BUT SIR WHO WILL SIGN THIS INTERNAL AUDIT REPORT PREPARED BY SUCH NON CA (ACCOUNT WRITING FIRM)?
Is is to be signed by OWNER OF SUCH NON CA FIRM WHICH WRITES ACCOUNTS in TALLY? OR BY A CHARTERED ACCOUNTANT? OR BY THE BOARD OR MANAGEMENT OF PVT LTD CO?
23 December 2012
internal audit report to be signed by the person responsible for conducting the internal audit. He need not be a CA(Chartered Accountant or Cost Accountant).If the company is a listed company with share capital more than 5 crores, then constitution of "Audit Committee" and a whole lot of regulations(Sec 292) relating to it become mandatory. Internal audit is useful for 1)Risk analysis 2)Checkup the level of internal control system in place . Organisations also employ the internal audit for improving 1)Cost control mechanisms 2)Accuracies.
CAclubindia
