Under Section 138 Companies Act 2013, internal audit is mandatory for which class of companies?
Aall companies without any threshold criterion of any kind (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13)
Bonly Government Companies as defined in Section 2(45) of the Act (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13)
Cevery LISTED company; and every unlisted public company having (i) paid-up capital ≥ Rs 50 crore in preceding FY, or (ii) turnover ≥ Rs 200 crore in preceding FY, or (iii) outstanding loans/borrowings ≥ Rs 100 crore at any point during preceding FY, or (iv) outstanding deposits ≥ Rs 25 crore at any time during preceding FY; and every PRIVATE company having (i) turnover ≥ Rs 200 crore, or (ii) outstanding loans/borrowings ≥ Rs 100 crore at any time during preceding FY
Donly OPCs and Small Companies, with all other companies being exempt (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13) (cf. Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13)
Answer & Solution
Correct answer: C. every LISTED company; and every unlisted public company having (i) paid-up capital ≥ Rs 50 crore in preceding FY, or (ii) turnover ≥ Rs 200 crore in preceding FY, or (iii) outstanding loans/borrowings ≥ Rs 100 crore at any point during preceding FY, or (iv) outstanding deposits ≥ Rs 25 crore at any time during preceding FY; and every PRIVATE company having (i) turnover ≥ Rs 200 crore, or (ii) outstanding loans/borrowings ≥ Rs 100 crore at any time during preceding FY
1. Section 138 Companies Act 2013 requires prescribed classes of companies to appoint an internal auditor (chartered accountant or cost accountant or such other professional).
2. Rule 13 Companies (Accounts) Rules 2014 prescribes: every LISTED company; every unlisted public company having paid-up capital ≥ Rs 50 crore, turnover ≥ Rs 200 crore, outstanding loans ≥ Rs 100 crore, or outstanding deposits ≥ Rs 25 crore in the preceding FY; every PRIVATE company having turnover ≥ Rs 200 crore or outstanding loans ≥ Rs 100 crore in preceding FY.
3. Audit Committee shall, in consultation with the internal auditor, formulate the scope, functioning, periodicity and methodology.
4. Hence option B is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013, Section 138; Companies (Accounts) Rules 2014, Rule 13_
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