Applicability of Internal Financial Control

As per Companies Act,2013 there is no threshold limit for Internal Financial Control. All companies, regardless of their size, nature of business or industry, are required to have an adequate system of internal financial controls in place to ensure the reliability of their financial statements, prevent fraud and mismanagement, and ensure compliance with applicable laws and regulations.

However as per MCA vide its notification dated 13th June 2017 (G.S.R. 583(E)) provided exemption from Applicability of Internal Controls over financial reporting (ICFR Applicability) to following private companies:

1. One-Person Company (OPC) or a Small Company; or

2. Company having turnover less than Rs. 50 Crores as per latest audited financial statement or which has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year less than Rs. 25 Crore.

Additionally, the above-mentioned Companies will be exempted from IFC Applicability only if it has not committed a default in filing its financial statements under section 137 of the Companies Act 2013.

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