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Board Resolution for appointment of Internal Auditor section 138

In accordance with section 138 of the Companies Act, 2013, certain classes of companies are 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 an internal audit of the functions and activities of the company.

draft board resolution for appointment of internal auditor as per companies act 2013The criteria of these classes of companies is prescribed under Rule 13 of the Companies (Accounts) Rules, 2014.

The Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.

Board resolution format for appointment of an internal auditor is given hereunder—


SAMPLE #1

#. To Appoint an Internal Auditor of the Company

“RESOLVED THAT pursuant to the provisions of section 138 of the Companies Act, 2013 read with Rule 13 of the Companies (Accounts) Rules, 2014, including any amendments thereto for the time being in force, M/s. .......................... & Co., Chartered Accountants (Firm Regn. No. ...................) be and is hereby appointed as the Internal Auditors of the company to conduct an internal audit of the functions and activities of the company for the Financial Year 20XX-XX.”

“RESOLVED FURTHER THAT Mr. .......... ............., Managing Director of the Company be and is hereby authorized to finalize the remuneration of the internal auditor, in consultation with the Chairman, at such fee and on such terms and conditions as may be mutually decided and agreed upon between the internal auditors and the company.”

“RESOLVED FURTHER THAT Mr. ............... ....................., General Manager - Finance of the company be and is hereby authorized to do all such acts, deeds and things as may be necessary or incidental in this regard to give effect to the aforementioned resolutions.”


SAMPLE #2

#. To Appoint the Internal Auditors of the Company

The Company Secretary informed the Board that the company is required to appoint an "Internal Auditor" as per section 138 of the companies Act, 2013 since our company is an unlisted public company having paid up share capital of more than fifty crore rupees during the preceding financial year.

The Managing Director recommended for the appointment of M/s. ............... & Associates, Chartered Accountants (Firm Regn. No. ...................) as the Internal Auditors of the company. M/s. ............... & Associates is a reputed firm with ...years of expertise in accounts and audit works of various companies and organisations across India. He further requested the Board to consider their appointment on a yearly retainership basis for their work.

The Board considered the same and passed the following resolution unanimously:

“RESOLVED THAT M/s. ............... & Associates. Chartered Accountants (Firm Regn. No. ...................) be and is hereby appointed as the Internal Auditors of the Company to conduct internal audit work of the Company, for the financial year .........., on a remuneration of Rs. ............ per annum plus applicable tax and out of pocket expenses that may be incurred.”

“RESOLVED FURTHER THAT the Audit Committee of the Board, in consultation with the Internal Auditor, shall formulate the scope, functioning, periodicity and methodology for conducting the internal audit.”

“RESOLVED FURTHER THAT the Managing Director and the Company Secretary be and is hereby authorised to issue an appointment letter to the Internal Auditors, and to do all such acts, deeds and things as may be necessary to give effect to the foregoing resolution.”



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NOTE: These resolution samples here are only for your reference to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder and any other applicable laws to be able to not to miss out anything important while drafting.

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