Internal Audit

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.

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.......

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

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.

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). 

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 "

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

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.

What is the penalty on company on not getting their internal audit done???