Document background
The Internal Audit Engagement Letter serves as the foundational document for establishing internal audit services within organizations in India. It is typically used when appointing internal auditors, whether in-house or outsourced, and is required under Section 138 of the Companies Act 2013 for specified classes of companies. The letter details the scope of work, methodology, reporting structure, and professional fees while ensuring compliance with Indian regulatory requirements, SEBI guidelines, and ICAI standards. This document is crucial for defining the independence of the internal audit function, establishing clear lines of responsibility, and ensuring proper corporate governance frameworks. The engagement letter becomes particularly important in the Indian context where internal audit requirements vary based on company size, listing status, and industry sector.
