Internal audit is an independent appraisal activity within an organization that reviews systems, procedures, and compliance with policies. It helps ensure efficient controls are in place for all organizational activities and assets. The purpose of internal audit is to detect errors and fraud, identify risks, and forewarn management about deficiencies. It identifies both issues and opportunities to improve an organization's financial, operational, and planning processes. Certain companies and trusts are required by law to appoint an internal auditor, including those with a paid up capital over 50 lakh rupees or average annual turnover exceeding 5 crore rupees for the last three years.

1. Internal Audit
How does it help and why is it important

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What is Internal Audit?
Internal audit is:
• Tool of control to measure and evaluate the effectiveness of the working of an
organization
• To ensure that all the laws, rules and regulations governing the operations of the
organization are adhered to
• An independent appraisal activity within an organization for the review of
systems, procedures, practices, compliance with policies for accounting,
financial and other operations as a basis for service to management.
• Internal Audit plays a pivotal role in ensuring that efficient controls are operating
in all the activities, be it is liabilities or assets of an Organization.
• It is a tool to identify risks and also suggests remedial measures, thereby acting
as a catalyst for change and action.

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What is the purpose of Internal Audit?
IA
Detection
Forewarning the
Management about errors,
frauds and
misappropriations.
Brings the deficiencies to
Management’s notice in
advance
Identifies the good, bad and ugly in
financial, operational and future
plans of organisation

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Who all need Internal Audit?
As per Companies (Auditor’s Report) Order, 2003, by the Government of India in terms
of sub-section (4A) of section 227 of the Companies Act, 1956,
it is mandatory for all Companies to appoint internal auditor,
if CARO 2003 is applicable.
All Companies & Trust
(Listed or Unlisted)
Companies where
CARO, 2003 is
applicable
Paid up capital and reserves > INR 50 Lakh
at the commencement of financial year
Average Annual Turnover exceeding INR 5 Cr
for a period of three consecutive financial
years, immediately preceding the financial
concerned

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Choose your Internal Audit Consultants
on LetzConsult