Board Resolution for Appointment of Internal Auditor — Format 2026
PART I — CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF {{company_name}} HELD ON {{meeting_date}} AT {{meeting_place}}
CIN: {{cin}}
Registered Office: {{registered_office}}
- Use only the variant that applies — Variant A (a firm of chartered accountants or other outside professional) or Variant B (an employee of the company) — and delete the other before issuing the certified copy. The recital and the further resolutions that follow the variants are common to both.
APPOINTMENT OF INTERNAL AUDITOR FOR THE FINANCIAL YEAR 2026-27
The Chairman informed the Board that the company is required to appoint an internal auditor under Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014, being ____________ [state the limb that applies: 'a listed company'; or 'an unlisted public company having paid-up share capital of fifty crore rupees or more / turnover of two hundred crore rupees or more during the preceding financial year / outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees / outstanding deposits of twenty-five crore rupees or more at any point of time during the preceding financial year'; or 'a private company having turnover of two hundred crore rupees or more during the preceding financial year / outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees at any point of time during the preceding financial year'. A company appointing voluntarily should say so and omit the reference to Section 138].
The Chairman further informed the Board that the Audit Committee, at its meeting held on , considered the qualifications, experience, resources, independence and proposed terms of the person named below, noted the confirmation that the person is not the statutory auditor of the company or of its holding or subsidiary company, and recommended the appointment to the Board [delete this paragraph where the company is not required to constitute an Audit Committee, and replace 'the Audit Committee' with 'the Board' in the resolutions below]. After discussion, the following resolutions were passed:
VARIANT A — FIRM OF CHARTERED ACCOUNTANTS / OUTSIDE PROFESSIONAL
"RESOLVED THAT pursuant to Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 and other applicable provisions, if any, and on the recommendation of the Audit Committee, M/s , Chartered Accountants (Firm Registration No. ), having their office at [or: 'Cost Accountants'; or, for another professional decided upon by the Board, state the profession, qualification and experience relied on], be and are hereby appointed as the Internal Auditors of the company for the financial year 2026-27, to conduct the internal audit of the functions and activities of the company.
VARIANT B — EMPLOYEE OF THE COMPANY
"RESOLVED THAT pursuant to Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014 and other applicable provisions, if any, and on the recommendation of the Audit Committee, , of the company, a Chartered Accountant holding Membership No. [or: 'a Cost Accountant holding Membership No. ____________'; or state the other professional qualification and experience on which the Board relies], be and is hereby appointed as the Internal Auditor of the company for the financial year 2026-27, to conduct the internal audit of the functions and activities of the company, and that in that capacity the Internal Auditor shall report functionally to the Audit Committee and administratively to ____________ [for example, the Managing Director], and shall not hold operating responsibility for any function that is subject to internal audit, or, where that cannot be avoided, the internal audit of that function shall be assigned to another person approved by the Audit Committee.
FURTHER RESOLUTIONS — COMMON TO BOTH VARIANTS
RESOLVED FURTHER THAT, as required by Rule 13(2) of the Companies (Accounts) Rules, 2014, the scope, functioning, periodicity and methodology for conducting the internal audit for the financial year 2026-27, as formulated by the Audit Committee in consultation with the Internal Auditor and set out in the Annexure to this resolution, be and are hereby noted and approved; that the internal audit be conducted and reported on a quarterly basis; and that the reports of the Internal Auditor, with the responses of the management and the status of action taken on earlier observations, be placed before the Audit Committee.
RESOLVED FURTHER THAT the Internal Auditors be paid a remuneration of ₹ for the financial year 2026-27, plus applicable taxes and reimbursement of out-of-pocket expenses at actuals, on the terms set out in the letter of appointment placed before the Board [Variant B — replace with: 'RESOLVED FURTHER THAT, the Internal Auditor being in the whole-time employment of the company, no separate remuneration shall be payable for the appointment, and the terms of employment shall continue to apply'].
RESOLVED FURTHER THAT the Internal Auditor shall have access to the books, records, systems, properties and personnel of the company necessary for the internal audit, shall have direct access to the Chairperson of the Audit Committee, and shall treat all information obtained as confidential.
RESOLVED FURTHER THAT {{authorised_person}} be and is hereby authorised to issue the letter of appointment, to obtain the written consent and acceptance of the Internal Auditor, to file this resolution with the Registrar of Companies in Form MGT-14 within thirty days of its passing ____________ [confirm with the company secretary before retaining or deleting this limb — see the note on filing below], to make such intimation to the stock exchange(s) as is required of a listed company [delete for an unlisted company], and to do all such acts, deeds and things as may be necessary to give effect to this resolution."
- Drafting hint — who may be appointed: Section 138(1) allows a chartered accountant, a cost accountant, or such other professional as the Board may decide. Rule 13 speaks of an internal auditor or a firm of internal auditors, and its Explanation says the internal auditor may or may not be an employee and that "Chartered Accountant" means a chartered accountant whether engaged in practice or not. Where the Board appoints another professional, record in the minutes why that person is suitable.
- Drafting hint — who may not: the statutory auditor of the company cannot render internal audit services to it, or to its holding or subsidiary company, directly or indirectly (Section 144). "Indirectly" reaches the auditor's partners and network firms. Obtain the confirmation in Part II before the meeting, not after.
- Drafting hint — term: Section 138 does not fix a term, a rotation period or a cooling-off for the internal auditor. Appointing for one financial year, as drafted here, is common practice. For a longer term, replace 'for the financial year 2026-27' with the years covered and provide for the annual approval of the plan and fee.
- Drafting hint — meeting, not circulation: Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 lists the appointment of internal auditors among the powers the Board exercises only by a resolution passed at a meeting. Pass this at a Board meeting; directors may attend by video conferencing.
- Note on filing: because the appointment is Board-meeting business under Section 179(3) read with Rule 8, company secretaries commonly file the resolution of a public company in Form MGT-14 within thirty days under Section 117(3)(g), and treat a private company as exempt from that clause. Confirm the current position for your company before filing or omitting it. There is no separate e-form for the internal auditor comparable to Form ADT-1 for the statutory auditor.
ANNEXURE — SCOPE, FUNCTIONING, PERIODICITY AND METHODOLOGY OF INTERNAL AUDIT FOR 2026-27 [Rule 13(2)]
| Head | As formulated by the Audit Committee in consultation with the Internal Auditor |
|---|
| 1. Scope — entities and locations | ____________ [the company; subsidiaries, plants, branches and warehouses covered; anything excluded and why] |
| 2. Scope — processes and functions | ____________ [for example: procure to pay, order to cash, inventory, payroll, fixed assets, treasury and banking, statutory compliance, IT general controls, month-end close] |
| 3. Period covered | 1 April ____ to 31 March ____ |
| 4. Functioning — reporting line | Functionally to the Audit Committee; administratively to ____________ |
| 5. Functioning — access and coordination | Unrestricted access to records, systems and personnel within scope; management nodal officer: ____________; coordination with the statutory auditor: ____________ |
| 6. Periodicity — fieldwork and reporting | quarterly; reports to be issued within ____ days of the end of each period |
| 7. Periodicity — Audit Committee presentation | ____________ [for example, at each quarterly meeting of the Audit Committee] |
| 8. Methodology — planning | Risk-based annual internal audit plan to be placed before the Audit Committee by ____________ |
| 9. Methodology — testing | ____________ [walkthroughs and control testing; sampling basis or full-population analytics; data to be obtained from Tally / SAP / other system] |
| 10. Methodology — reporting and follow-up | Observations with condition, criteria, cause, effect and recommendation; rating scale: ____________; management response with owner and target date; action taken report at each cycle |
| 11. Standards to which the Internal Auditor will have regard | The Standards on Internal Audit issued by the Institute of Chartered Accountants of India, as applicable [and ____________] |
| 12. Matters outside scope | ____________ [for example: expression of an opinion on the financial statements; work reserved to the statutory auditor] |
- Rule 13(2) places the duty to formulate these four heads on the Audit Committee or the Board, in consultation with the internal auditor. A fee quotation or a one-line scope in the appointment letter does not discharge it — the minutes should show that the committee considered and settled each head.
- Keep the detailed annual plan as a separate document approved by the Audit Committee; this annexure records the frame within which that plan is drawn.
Certified that the above is a true copy of the resolution passed at the meeting of the Board of Directors of the company held on {{meeting_date}}, that the same has been duly recorded in the minutes book of the company, and that the said resolution is in force and has not been rescinded or modified as on date.
By order of the Board
For {{company_name}}
_______________________________
{{chairman_name}}
Director / Company Secretary
DIN / Membership No.: ____________
Place: __________________ Date: ____________
PART II — CONSENT AND ACCEPTANCE BY THE INTERNAL AUDITOR
[On the letterhead of the internal audit firm. For an employee appointed under Variant B, adapt as a signed note to the Audit Committee and delete paragraphs 5 and 6.]
Date:
To
The Board of Directors
{{company_name}}
{{registered_office}}
Subject: Consent to act as, and acceptance of appointment as, Internal Auditor for the financial year 2026-27
Dear Sirs / Madams,
1. We refer to your proposal to appoint us as the Internal Auditors of {{company_name}} ('the Company') for the financial year 2026-27 under Section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014. We hereby give our consent to act as the Internal Auditors of the Company and, upon the Board passing the resolution, accept the appointment on the terms set out below.
2. Eligibility. We confirm that we are a firm of Chartered Accountants registered with the Institute of Chartered Accountants of India (Firm Registration No. ) [or: Cost Accountants / state the other professional qualification], and that the engagement will be led by ____________ (Membership No. ____________).
3. Independence. We confirm that neither we nor any of our partners, nor any firm or entity in our network or using our name or brand, is the statutory auditor of the Company or of its holding company or any of its subsidiary companies, and that our acting as Internal Auditors does not involve the rendering of a service prohibited by Section 144 of the Companies Act, 2013 by any such statutory auditor. We further confirm that we have no relationship with the Company, its directors or its key managerial personnel, and no responsibility for any function of the Company that will be subject to internal audit, that would impair our objectivity, other than the following: ____________ [state 'none', or disclose]. We shall inform the Audit Committee promptly of any change.
4. Scope and conduct. We shall conduct the internal audit in accordance with the scope, functioning, periodicity and methodology formulated by the Audit Committee [the Board] in consultation with us under Rule 13(2) and annexed to the resolution of the Board, and the annual internal audit plan approved thereunder, having regard to the Standards on Internal Audit issued by the Institute of Chartered Accountants of India, as applicable. Our reports will be issued on a quarterly basis and will be addressed to the Audit Committee, with copies to the management as the Audit Committee directs.
5. Responsibilities of the management. The design, implementation and operation of internal controls, and the prevention and detection of fraud and error, remain the responsibility of the management of the Company. The management will give us timely access to the books, records, systems, properties and personnel within scope, and written responses to our observations with an owner and a target date for each agreed action. Our work is an internal audit and does not constitute an audit of the financial statements or an opinion on them.
6. Remuneration. Our fee for the financial year 2026-27 will be ₹ , plus applicable taxes and out-of-pocket expenses at actuals, payable ____________ [for example, quarterly on submission of each report].
7. Confidentiality. We shall keep confidential all information obtained in the course of the internal audit and shall not disclose it to any third party without the consent of the Company, except where disclosure is required by law or by a professional or regulatory body. Our working papers remain our property and will be retained for ____ years.
8. This consent is given, and the appointment is accepted, for the financial year 2026-27 and may be terminated by either party by ____ days' written notice, addressed in the case of notice by us to the Chairperson of the Audit Committee.
Yours faithfully,
For
Chartered Accountants
Firm Registration No.:
_______________________________
Partner
Name: ____________ Membership No.: ____________
Place: __________________
Acknowledged and taken on record on behalf of {{company_name}}
_______________________________
{{authorised_person}}
Date: ____________
