You are newly appointed as the Company Secretary of ABC Pvt Ltd. Rama, who is the CEO of the Company, is not clear on concept and applicability of internal audit to your company. She approaches you to understand the same

According to Institute of Internal Auditors "Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes." Applicability of Internal Audit: As per Section 138 of the Companies Act, 2013 and Companies (Accounts) Rules, 2016, the following class of companies shall be required to appoint an internal auditor:- every listed company every unlisted public company having :- paid up share capital of fifty crore rupees or more during the preceding financial year; or turnover of two hundred crore rupees or more during the preceding financial year; or 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 outstanding deposits of twenty-five crore rupees or more at any point of time during the preceding financial year; and every private company having :- turnover of two hundred crore rupees or more during the preceding financial year; or 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. An Internal Auditor may be either an individual or a partnership firm or a body corporate. An internal auditor can be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The internal auditor may or may not be an employee of the company. The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.