Changes in GST Effective from 1st September 2024

In the complex world of business, staying compliant with financial regulations is paramount for every company, regardless of its size or industry. Internal audits play a crucial role in ensuring this compliance, helping businesses identify areas of improvement in financial reporting, risk management, and operational efficiency. Today, we’ll explore the specific criteria that determine whether your company is required to conduct an internal audit.

Who Needs an Internal Audit? The requirements for internal audits vary based on the type of company and certain financial thresholds. Here’s a breakdown of the criteria for listed companies, private companies, and unlisted public companies.

1. Listed Companies Listed companies have specific obligations due to their impact on public investors and the broader economy. If your listed company meets any of the following criteria, conducting an internal audit is mandatory:

• Outstanding loans or borrowings exceeding ₹100 crore during the previous financial year (P.F.Y.).
• Turnover of ₹200 crore or more during the P.F.Y.

2. Private Companies Private companies, often considered the backbone of the economy, are subject to internal audit requirements if they reach significant financial thresholds that potentially increase their risk profiles:

• Outstanding deposits of ₹25 crore or more during the P.F.Y.
• Outstanding loans or borrowings of ₹100 crore or more during the P.F.Y.
• Turnover of ₹200 crore or more during the P.F.Y.

3. Unlisted Public Companies Unlisted public companies, while not traded publicly, hold substantial economic sway and are required to maintain rigorous financial discipline if they meet any of the following conditions:

• Outstanding deposits of ₹25 crore or more during the P.F.Y.
• Outstanding loans or borrowings of ₹100 crore or more during the P.F.Y.
• Turnover of ₹200 crore or more during the P.F.Y.
• Paid-up share capital of ₹50 crore or more during the P.F.Y.

Why These Criteria? 

The criteria for internal audits are designed to ensure that businesses that handle significant amounts of money or have substantial economic impacts are regularly and thoroughly reviewed. This helps in maintaining transparency, enhancing the efficiency of operations, and ensuring that the business complies with legal and regulatory requirements.

Understanding whether your business is required to conduct an internal audit is crucial for maintaining compliance with regulatory standards and ensuring the financial health of your organization. For business owners, staying informed about these requirements not only helps in compliance but also enhances internal controls and operational efficiencies. Ensure your business meets these criteria and consider consulting with a financial advisor to navigate the complexities of internal audits effectively.

Stay compliant, stay informed, and most importantly, stay ahead in your business endeavors by embracing the discipline of internal audits.

About the Expert:

Mr. Butchibabu, Chartered Accountant, is a renowned expert in GST compliance and tax advisory services. With years of experience guiding businesses through the complexities of GST regulations, Mr. Butchibabu and his team are committed to helping you navigate these changes smoothly. For personalized assistance with your GST filings, feel free to reach out.