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: Can Company Secretary be appointed as Internal Auditor in an Unlisted Public Company where he is already appointed as Key Managerial Personnel?

Answer & Explanation:

Section 138 of the Companies Act, 2013 states that an internal auditor, shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board. Further explanation to Rule 13 of The Companies (Accounts) Rules, 2014 states that the internal auditor may or may not be an employee of the company. In view of the above the Company Secretary who is appointed as Key Managerial Personnel in the company can be appointed as an internal auditor of the company.

Topics: Internal Audit

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