What does internal audit in India entail?

Internal audits are conducted at the behest of internal management in order to check the health of a company’s finances, and analyze the organization’s operational efficiency. Internal audits may be performed by an independent party or by the company’s own internal staff.

In India, every company whose shares are registered on the stock exchange must have an internal auditing system in place. A company whose shares are not listed on the stock exchange, but whose average turnover during the previous three years exceeds INR 50 million, or whose share capital and reserves at the beginning of the financial year exceed INR 5 million, must also have an internal auditing system in place. The statutory auditor must additionally report on the company’s internal auditing system of the company in the final report.