Section 138: Internal audit
This section is for requiring certain companies to have an internal audit and outlining how it should be conducted and reported.
The section, clause by clause
What the section says
In plain terms
(1)Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company.
Companies of a certain prescribed class must appoint an internal auditor, who can be a chartered accountant, a cost accountant, or another professional decided by the Board, to conduct an internal audit of the company's functions and activities.
(2)The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.
The Central Government will decide how often and in what manner the internal audit should be conducted and reported to the Board.
(2)CHAPTER X AUDIT AND AUDITORS
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The proviso ins. by Act 1 of 2018, s. 39 (w.e.f. 7-5-2018).
- 2. The words and figures “within the time specified, under section 403” omitted by s. 39, ibid. (w.e.f. 7-5-2018).
- 3. Subs. by s. 39, ibid., for “in section 403” (w.e.f. 7-5-2018).
- 4. Subs. by Act 22 of 2019, s. 22, for “punishable with fine” (w.e.f. 2-11-2018).
- 5. Subs. by Act 29 of 2020, s. 28, for “one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees” (w.e.f. 21-12-2020).
- 6. Subs. by Act 22 of 2019, s. 22, for “punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both” (w.e.f. 2-11-2018).
- 7. Subs. by Act 29 of 2020, s. 28, for “one lakh rupees” (w.e.f. 21-12-2020).
- 8. Subs. by s. 28, ibid., for “five lakh rupees” (w.e.f. 21-12-2020).
- 9. The first proviso omitted by Act 1 of 2018, s. 40 (w.e.f. 7-5-2018).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.