Companies Act Section 138 — Internal audit

CHAPTER IX ACCOUNTS OF COMPANIES

Commercial / Corporate

Summary

Sub-section (1) states that companies belonging to the classes that are prescribed by the government must appoint an internal auditor. This auditor must be a chartered accountant, a cost accountant, or another professional chosen by the company's Board. The auditor's job is to conduct an internal audit of the company's functions and activities.

Sub-section (2) provides that the Central Government may make rules to specify the manner in which the internal audit is to be conducted and the intervals at which it must be done. These rules also cover how the audit results are to be reported to the Board.

Official Text

(1) Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either 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.

(2) The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.