Internal Auditor

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.