Whether the company is big or small, an Internal Audit can be useful to obtain the insights that can lead to strengthening the company's policies. Section 138 of the Companies Act, along with Rule 13 of Companies (Accounts) Rule, 2014, deals with the requirements of Internal Audit. This article can help to understand the criteria of Internal Audit.
As per Section 138 of the Companies Act, an Internal Auditor for the class of company/(ies) as provided by the Act shall be:
The Internal Auditor can be an individual/partnership firm/ body corporate.
Rule 13 of Companies (Accounts) Rule, 2014 provides the details of companies that must appoint an Internal Auditor.
A company can succeed by following efficient, effective practices and supporting the organizational goal. Internal Audit is used to reassess the policies and procedures and make amends as and when required to fulfill the operational needs without any errors or delays.
A record of all the financial transactions arranged in sequence through an automated application is known as Audit Trail. An Audit Trail can be beneficial while locating the transactions to its source document. This whole process can help eliminate various frauds and errors that might exist in a company.
The auditor can easily access the history of transactions and the document from the general ledger, ensuring fairness in the financial reports. The audit trail system is introduced in the Companies Act to promote transparency in recording the financial transactions by the company.