Internal Audit System

Reporting requirement

Report whether (a) the company has an internal audit system commensurate with the size and nature of its business; (b) the reports of the Internal Auditors for the period under audit were considered by the statutory auditor.

What to verify before signing

• Section 138 applicability check — does the company need internal audit?
• Internal Audit Charter (Audit Committee approved)
• Internal audit plan coverage vs prior year findings closure
• Statutory auditor's review of significant internal audit observations

Sample observation — applicable

(a) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (b) We have considered the internal audit reports of the Company issued till date, for the period under audit.

Sample observation — not applicable

The Company is not required to have an internal audit system under section 138 of the Companies Act 2013. Accordingly, the requirements of clause 3(xiv) of the Order are not applicable.

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