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

Under Section 138 of the Companies Act, 2013, who may be appointed as the internal auditor of a prescribed class of company?

The internal auditor may be a chartered accountant, a cost accountant, or another professional whom the Board decides. Section 138(1) therefore gives the Board flexibility in choosing the professional, and it is not restricted to a single profession or to company employees.

  1. AOnly a chartered accountant in practice who is not the statutory auditor
  2. BA chartered accountant, a cost accountant, or such other professional as the Board decidesCorrect
  3. COnly an employee of the company designated by the Audit Committee
  4. DOnly a cost accountant or company secretary

Explanation

Section 138(1) says the internal auditor shall be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board. The section does not restrict the choice to chartered accountants alone or to cost accountants and company secretaries. It also does not confine the appointment to employees.

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