P Pvt. Ltd. was incorporated under the Companies Act, 1956 on 3rd October, 2011. The Authorised Share Capital of the Company is ₹75 crores. The present paid-up Share Capital of the Company is ₹60 crore. The turnover of t

CS Professional · Governance, Risk Management, Compliances and Ethics · PYQS · December 2019
P Pvt. Ltd. was incorporated under the Companies Act, 1956 on 3rd October, 2011. The Authorised Share Capital of the Company is ₹75 crores. The present paid-up Share Capital of the Company is ₹60 crore. The turnover of the company for financial year 2017-18 was ₹150 crores and because of good overseas marketability of the company's product, the turnover of the company for the year ended 31st March, 2019 increased to ₹210 crores. The Secretarial Auditor of the company advised that the company should have internal audit in place, but the Managing Director of the company argued that since it is a private company, so it is not required. Based on the facts in the above case, answer the following questions: Whether internal audit is compulsory for the Private Limited?

Answer & Explanation:

As per section 138 of the Companies Act, 2013 read with rule 13(1)(c) of The Companies (Accounts) Rules, 2014 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 shall be required to appoint an internal auditor. As the turnover of the P Pvt. Ltd is more than ₹200 crore, for the year ended 31st March, 2019 it is mandatory to appoint an internal auditor.

Topics: Internal Audit

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic