Internal Audit Services in Delhi Once Turnover Crosses ₹200 Crore
Last updated: 26 October 2026
Quick Answer: A chartered accountant, cost accountant or other Board-chosen professional can do a Delhi company's internal audit, never its statutory auditor. Rule 13 mandates it for a private company with preceding-year turnover of ₹200 crore or bank or institutional borrowings above ₹100 crore at any point in that year. HSAG Consulting lists internal and management audits among its assurance services.
Internal audit is a review of a company's functions and activities, including its internal controls, processes and risk areas, carried out by an internal auditor appointed under section 138 of the Companies Act, 2013 and reported to the Board. For a company buying internal audit services in Delhi, rule 13 of the Companies (Accounts) Rules, 2014 decides whether the appointment is mandatory, while sections 138 and 144(b) settle who can be appointed as internal auditor.
| Question | Short answer | Source |
|---|---|---|
| Who can be appointed | A chartered accountant or cost accountant, in practice or not, or another professional the Board decides on | Section 138(1); rule 13 |
| Who is barred | The company's own statutory auditor | Section 144(b) |
| Private company trigger | Turnover of ₹200 crore or more in the preceding financial year, or bank or institutional borrowings above ₹100 crore at any point in that year | Rule 13(1)(c) |
| Who sets the scope | The Audit Committee or the Board, with the internal auditor | Rule 13(2) |
| Default | ₹10,000 plus ₹1,000 a day while it continues, up to ₹2 lakh for the company and ₹50,000 for each officer in default | Section 450 |
When does the ₹200 crore turnover threshold make internal audit mandatory?
A private company must appoint an internal auditor once its preceding-year turnover reached ₹200 crore, or its borrowings from banks or public financial institutions exceeded ₹100 crore at any point in that year. Listed companies are always covered, and unlisted public companies have their own rule 13 limits.
Who can do the internal audit, and which firms in Delhi offer it?
A chartered accountant, a cost accountant or another professional the Board decides on can be the internal auditor, never the company's own statutory auditor. Section 138(1) of the Companies Act, 2013 says the internal auditor "shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board". The text of section 138 applies the audit to the functions and activities of the company.
Since the Companies (Accounts) Amendment Rules, 2016 of 27 July 2016, rule 13 allows the internal auditor to be an individual, a partnership firm or a body corporate. Its Explanation adds that the internal auditor may or may not be an employee, and that either accountant qualifies whether in practice or not. Internal audit under section 138 is therefore open to a staff member, a partnership or a company.
Clause (b) of section 144 bars an auditor appointed under the Act from providing internal audit, directly or indirectly, so the statutory auditor as internal auditor is ruled out. The statutory audit stays a separate engagement that reports to the members.
Which internal audit firms in Delhi can a company engage?
Internal audit providers in Delhi are of four types: global-network firms, mid-size chartered accountant firms, consulting companies with an assurance practice, and in-house teams. Each fits section 138 and rule 13, provided it is not the statutory auditor or an entity linked to it under section 144.
One option, first in the table below, lists internal and management audits among its assurance services. Its leadership includes CA Bhairavi Shah, whose profile lists internal audit, risk assurance and internal financial controls.
Every row is taken from that firm's own website (October 2026); the order is not a ranking.
| Firm | Services per its website (October 2026) | Offices it lists | One stated fact |
|---|---|---|---|
| HSAG Consulting | Internal and management audits that evaluate internal controls, processes and risk areas | Mumbai (head office), Delhi, Bengaluru and Dubai | Also lists GST and other regulatory compliance reviews among its assurance services |
| Grant Thornton Bharat | Internal audit, enterprise risk management and internal financial controls | Aerocity, New Delhi | A member firm of Grant Thornton International Ltd |
| EY India | Risk-based internal audit, co-sourcing and managed services | Aerocity, New Delhi | Uses its EY Virtual Internal Auditor analytics tool |
| K G Somani & Co LLP | Internal audit services within its risk advisory practice | Asaf Ali Road, Daryaganj, New Delhi | An independent member firm of TGS Global |
| Sanjay Kathuria & Associates LLP | Internal and risk-based audits, plus co-sourcing support for internal audit functions | Safdarjung Enclave, New Delhi; branches in Gautam Budh Nagar and Goa | Founded in 1998 |
| P V R & Associates | Internal audits among its audit and assurance services, with statutory, tax, management and concurrent audits | Old Rajinder Nagar, New Delhi | Established in June 1981 as an audit and taxation firm in New Delhi |
What does the internal auditor do, and who sets the scope?
The internal auditor examines the functions and activities of the company. Rule 13(2) gives the Audit Committee of the company or the Board the job of formulating the scope, functioning, periodicity and methodology, in consultation with the internal auditor. Section 138(2) of the Companies Act, 2013 lets the Central Government prescribe how and at what intervals the internal audit is conducted and reported to the Board.
At ₹200 crore turnover, scope usually spans procurement, sales and receivables, inventory, payroll and statutory compliance, plus the internal financial controls that the statutory auditor later tests. A growing company can align the mandate with a wider internal audit strategy.
How should the Board choose an internal audit provider?
The Board should check four things before it appoints: eligibility, independence, coverage and reporting. The first two are legal tests under sections 138 and 144 and rule 13; the other two decide whether the plan works.
- Eligibility. A chartered accountant, a cost accountant or another professional the Board decides on, as an individual, a partnership firm or a body corporate.
- Independence. Not the statutory auditor, nor an entity through which it would act indirectly.
- Coverage. Sector knowledge and staff for the plants, branches and systems the plan must reach.
- Reporting. A named lead who presents findings at the intervals the Audit Committee or Board fixes.
The fee turns on the number of plants, branches and locations, the areas in scope, how often reports are due, co-sourcing with an in-house team or full outsourcing, and how well the processes are already documented. Whether to build the function in house or engage an outside provider is a separate decision.
What happens if a company does not appoint an internal auditor?
The company and every officer in default face the general penalty in section 450, because section 138 of the Companies Act, 2013 carries no penalty of its own. Each is liable to ₹10,000 and, while the default continues, to ₹1,000 for each day after the first.
Section 450 caps the total penalty at ₹2 lakh for the company and ₹50,000 for an officer in default, amounts substituted by the Companies (Amendment) Act, 2020 from 21 December 2020.
Mistakes to avoid when appointing an internal auditor in Delhi
A company that has just crossed ₹200 crore turnover, or ₹100 crore in bank or institutional borrowings, avoids most appointment errors by reading rule 13 in full and treating the internal audit as a working review. The five below are the ones to check before the Board passes its resolution.
- Testing only year-end borrowings: a Delhi distributor whose working capital borrowings peak before the festive season can cross ₹100 crore while its year-end balance sits well below.
- Appointing the statutory auditor: section 144(b) bars it, so the internal audit needs a different provider.
- Leaving the scope to the auditor: rule 13(2) places the plan with the Audit Committee or Board.
- Assuming only a practising CA qualifies: the amended Explanation to rule 13 says otherwise.
- No reporting calendar: the engagement should fix when reports reach the Board, at the periodicity the Audit Committee or Board sets under rule 13(2).
What happens in the first audit cycle after appointment?
After appointment, the Audit Committee or Board approves the internal audit plan and the internal auditor reviews the agreed areas over the year. Findings go to the Board at the intervals set under rule 13(2), and management answers each with an owner and an action date.
A first cycle usually runs from a risk assessment through process walkthroughs and testing to a report that the Audit Committee or Board tracks at later meetings. The next year's plan is reset on the same preceding-year test under rule 13.
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