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CS Executive · Company Law and Practice · Accounts and Auditors

Which of the following correctly describes who is required to have an internal auditor under section 138 of the Companies Act, 2013?

Only such class or classes of companies as may be prescribed must appoint an internal auditor under section 138. It is not mandatory for every company, nor limited to listed or cost-audited companies; the applicable classes are determined by rules.

  1. AEvery company, irrespective of size
  2. BOnly listed companies
  3. CSuch class or classes of companies as may be prescribedCorrect
  4. DOnly companies whose accounts are subject to cost audit

Explanation

Section 138(1) applies to such class or classes of companies as may be prescribed. It does not cover every company, nor is it restricted to listed or cost-audited companies. The classes are fixed through rules made by the Central Government.

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