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CA Final · Advanced Auditing, Assurance and Professional Ethics · Internal Audit

Kaveri Agro Producer Company, registered as a Producer Company under the Companies Act, 2013, asks whether it must have its accounts internally audited and by whom. Which statement is correct?

Every Producer Company must have its accounts internally audited, at the interval and in the manner its articles specify, by a chartered accountant as defined in the Chartered Accountants Act, 1949. There is no turnover threshold, and the work is not left to just any person.

  1. AInternal audit is optional for Producer Companies and may be done by any person the members choose
  2. BInternal audit is required only if the turnover crosses a prescribed limit, and a cost accountant may carry it out
  3. CThe company must have its accounts internally audited at the interval and in the manner specified in its articles, by a chartered accountantCorrect
  4. DInternal audit must be done every quarter by the statutory auditor of the company

Explanation

Section 378ZF requires every Producer Company to have internal audit of its accounts carried out at the interval and in the manner specified in its articles. The auditor must be a chartered accountant as defined in the Chartered Accountants Act, 1949. It sets no turnover threshold and does not allow a cost accountant. Using the statutory auditor would conflict with Section 144.

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