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CS Professional · Internal and Forensic Audit · Internal Audit: Introduction and Overview

Sunrise Textiles Ltd, an unlisted public company, has paid-up capital of Rs 40 crore, no listed securities and no outstanding public deposits. Its turnover in the preceding financial year was Rs 250 crore and its outstanding loans from banks were Rs 30 crore. Under the Companies (Accounts) Rules on internal audit, which feature of this company is the deciding reason it must appoint an internal auditor?

The company must appoint an internal auditor because its turnover of Rs 250 crore exceeds the Rs 200 crore threshold for unlisted public companies. Its paid-up capital and bank loans are below the prescribed limits, so turnover alone triggers the requirement.

  1. AIts paid-up capital is Rs 40 crore
  2. BIts turnover of Rs 250 crore, which is at or above Rs 200 croreCorrect
  3. CIts bank borrowings of Rs 30 crore
  4. DIts status as a public company

Explanation

For unlisted public companies, the rules require internal audit if paid-up capital is Rs 50 crore or more, turnover is Rs 200 crore or more, or outstanding loans from banks and financial institutions exceed Rs 100 crore, or deposits are Rs 25 crore or more. Here only turnover (Rs 250 crore) crosses its threshold. Capital of Rs 40 crore and loans of Rs 30 crore fall below their limits.

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