Private limited companies with substantial turnover or debt must appoint internal auditors under the Companies Act, 2013. The article details the requirements and consequences of non-compliance.
Internal Audit Applicability for Private Companies in India
The Companies Act, 2013 requires private limited companies with a turnover exceeding ₹200 crores or borrowings above ₹100 crores to designate an internal auditor. This mandate underscores the significance of internal audits in enhancing governance and accountability within corporate structures.
By appointing internal auditors, companies can effectively assess and manage risks, ensuring adherence to statutory requirements. The article also outlines the penalties imposed for non-compliance, emphasizing the importance of internal audits in safeguarding against financial mismanagement.
Legal professionals should advise their clients on the critical need for compliance with this Internal Audit requirement to avoid penalties and foster a culture of transparency and accountability within the corporate framework.
