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CS Executive · Company Law and Practice · Accounts and Auditors

Sunrise Textiles Ltd, a company falling within a class prescribed under the Companies Act, 2013, wishes to appoint its internal auditor. Which of the following persons can the Board appoint under the Act itself as internal auditor?

The internal auditor may be a chartered accountant or a cost accountant, or any other professional whom the Board decides to appoint. The Act does not confine the choice to one profession or to the statutory auditor, so the Board has this flexibility for prescribed companies.

  1. AOnly a practising company secretary
  2. BA chartered accountant, a cost accountant, or another professional decided by the BoardCorrect
  3. COnly the statutory auditor of the company
  4. DOnly a chartered accountant in practice who is not a cost accountant

Explanation

Section 138(1) provides that the internal auditor shall be either a chartered accountant or a cost accountant, or such other professional as the Board may decide. It is not limited to the statutory auditor or only to chartered accountants. Hence the option listing all three categories is correct, while the options restricting the choice to one profession are wrong.

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