MAPL wants to know as per Company Law, when a company is required to appoint an internal auditor and who shall be appointed as internal auditor. In…

(a) When a Company is required to appoint an Internal Auditor? Applicability of Provisions of Internal Audit: As per Section 138 of the Companies Act, 2013, following class of companies (prescribed in rule 13 of Companies (Accounts) Rules,2014) shall be required to appoint an internal auditor which may be either an individual or a partnership firm or a body corporate, namely- (a) every listed company; (b) every unlisted public company having- (i) paid up share capital of fifty crore rupees or more during the preceding financial year; or (ii) turnover of two hundred crore rupees or more during the preceding financial year; or (iii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year; or (iv) outstanding deposits of twenty-five crore rupees or more at any point of time during the preceding financial year; and (c) every private company having- (i) turnover of two hundred crore rupees or more during the preceding financial year; or (ii) outstanding loans or borrowings from banks or public financial institutions exceeding one hundred crore rupees or more at any point of time during the preceding financial year. Who shall be Appointed as an Internal Auditor? As per Section 138, the internal auditor shall either be a chartered accountant or a cost accountant (whether engaged in the practice or not), or such other professional as may be decided by the Board to conduct an internal audit of the functions and activities of the company. The internal auditor may or may not be an employee of the company. To be effective, the internal auditor must be regarded as a part of the management and not merely as an assistant thereto. Furthermore, he or she must have the authority to investigate every organizational activity to meet the objectives and scope of the internal audit. From which year MAPL will be required to have an Internal Auditor In the given situation, MAPL is having turnover of rupees 250 crores in the financial year 2022-23, which is exceeding the prescribed limit of two hundred crore rupees. Therefore, MAPL is required to appoint the internal auditor for the year 2023-24 as per the abovementioned provisions of Section 138 of the Companies Act, 2013.