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Secretarial Audit

A Secretarial Audit is an audit to examine the compliances of various legislations including the Companies Act and other cooperative and economic laws applicable to the company. Get your Secretarial Audit done by Corpbiz, one of the leading consultancies in taxation and Audit.

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Overview of Secretarial Audit

The Secretarial Audit is an audit where the Secretarial Auditor expresses an opinion as to whether there subsist appropriate systems and processes in the company proportionate with the size and operations of the company to monitor and check compliance with applicable laws, rules, regulations, and guidelines. The Key features of Secretarial Audit are given below, those are as follows:-

  • It helps in recognizing the event of non-compliance and facilitates taking corrective measures.
  • It audits the compliance of good corporate practices by the company.
  • It is an independent process intended to add value and improve the operations of the Company.
  • It helps in accomplishing the company’s objectives by bringing a systematic, productive approach to examine and potential effectiveness of risk management, control, and governance processes.
  • It provides necessary comfort to the management, regulators, and stakeholders, as to statutory compliance, good governance, and the existence of proper and adequate systems and processes.

What is the Applicability of Secretarial Audit?

Secretarial Audit is mandatory for the below-mentioned companies. Also, the companies are required to prepare the Secretarial Audit Report.

  • Every Listed Company
  • Every public company having a paid-up share capital of 50 crore rupees or more.
  • A public company having a turnover of more than Rs. 250 crore or more.
  • Every company having a borrowing of 100 crores or more.
Note- If anyone of the above criteria meets, a secretarial audit is mandatory.

The secretarial audit report is applicable for every company, only when it has fulfilled the following conditions such as:

Secretarial Audit is mandatory

Who can be Appointed as a Secretarial Auditor?

Members of the ICSI (Institute of Company Secretaries of India), who are holding the certificate of practice which validates to perform as a secretarial audit, can only conduct Secretarial Audit and prepare the Secretarial Audit Report of the Company.

What are the Important Provisions regarding the Secretarial Audit?

The important provisions regarding Secretarial Audit are as follows:-

  • Matters to be specified in the Secretarial Audit.
  • Flexibility in the form of a Compliance Certificate.
  • Verification of records and documents.
  • A Crucial area of the Secretarial Audit report under the Companies Act 2013.
  • Crucial area of the Secretarial Audit report under SEBI Rules and Regulations.
  • Crucial area of the Secretarial Audit report under other laws.
  • Period of the Secretarial Audit.
  • Disqualification for the appointment of the Secretarial Auditors.
  • Duty of the company to provide all assistance.
  • Objectives of Secretarial Audit.

Secretarial Audit

What are the Benefits of a Secretarial Audit?

The Benefits of Secretarial Audit are as follows:-

  • It can be an effectual due diligence performance for the prospective acquirer of a company or possessing interest or a partner of a Joint venture.
  • It indemnifies the owners that the management and affairs of the company are being conducted following the requirements of law and that the owner’s stake is not being exposed to undue risk.
  • It administers professional discipline and self-regulation.
  • Reduces the work pressure of the regulators due to better and timely compliances.
  • It shows the right path to investors by showcasing your legal records.

Who are the Beneficiaries of Secretarial Audit?

Beneficiaries of Secretarial Audit

What Laws are specifically mentioned in the Secretarial Audit Reports?

In terms of Secretarial Audit report, the Secretarial Auditor needs to examine and report the compliance of the following specific laws-

  • The Companies Act, 2013 (the Act) and the rules made thereunder,
  • The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder,
  • The Depositories Act, 1996 and the Regulations and Byelaws framed thereunder,
  • Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings,
  • The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’)-
Secretarial Audit Reports

What is the procedure of the Secretarial Audit?

The detailed Secretarial Audit process is given below:-

  • Appointment of Secretarial Auditor
  • Communication to earlier Incumbent
  • Acceptance of Appointment by the Secretarial Auditor
  • Preliminary Discussions about the company with the Secretarial Auditor
  • Preliminary Meeting with the Auditor
  • Finalization of Audit plan and briefing the staff
  • Testing, Interview and Analysis
  • Preparing the working papers
  • Audit Summary for Discussions
  • Submission of Secretarial Audit Report

What is the Manner of Reporting Qualification in the Secretarial Audit Report?

While Reporting a Secretarial Audit report, the Secretarial Auditor shall mark a qualification, reservation, or adverse remarks, if any, at the relevant places in his report in Bold type or Italics. However, if the auditor is unable to express an opinion on any matter, he/she should specify that he/she is unable to express an opinion on that particular matter stating the reasons therefore.

If the requisite work required to be performed is constricted on account of restrictions imposed by the company or on account of circumstantial limitations, the Report should highlight such limitations. If such limitations are so perceptible that the Auditor is unable to express any opinion, he/she should state that in the absence of necessary information and records, he is unable to report on compliance(s) relating to the restricted areas by the Company.

Further, the BOD of the company in its Board’s report shall explain in full qualification or observation or other remarks made by the PCS in the Secretarial Audit Report.

What Documents are required for Secretarial Audit?

Below-mentioned documents are required for Secretarial Audit-

  • Charter Documents and Statutory Registers,
  • Board and General Meeting Minutes & Notices,
  • Audited financial statements and Last year Secretarial Audit Report,
  • If the company is listed, Filings & Intimations with ROC, Stock Exchanges, Newspaper Advertisements.
  • Annual Performance Reports, Lease Deed, Bonds and returns
  • Filings with RBI (If there is a foreign investment) and other statutory departments,
  • Registers maintained under Labour Laws
  • Admission and Statement for code of conduct received from the directors
  • Remuneration and Sitting fees details paid to directors.
  • Particulars of CSR amount
  • SAST Disclosures
  • Bank account details for dividend
  • Details of ECB Returns, in case of foreign borrowings in the company.

What are the Frauds and Penalties associated with penalty for False Statements?

Section 448 of Companies Act 2013, deals with the penalty for false statements. The section provides that if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,—

  • Which is false in any material particulars, knowing it to be false; or
  • Which omits any material fact, knowing it to be material, he shall be liable under section 447.
Section 447 deals with Punishment for Fraud

It provides that any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which-

Punishment for Fraud

In terms of Section 448, a PCS is liable to attract penal provision if, he makes statement in the Secretarial Audit Report which is false is any material particulars, knowing it be false or omits any material fact knowing it to be material.

How Corpbiz help its client in Secretarial Audit?

Corpbiz has team of experts and experienced business advisors who will assist and execute the entire Secretarial Audit. Corpbiz helps its client in conducting the Secretarial Audit by providing services like-

  • Proper analysis of laws and accounts & addresses all queries about Secretarial Audit.
  • Preparation of proper documents and analysis of reports and statements.
  • Making sure that the company follows the applicable Secretarial Standards & analysis of Business and Working procedure.
  • Ensures that the audit services should be viewed as an investment with medium to long term profits.
Why Corpbiz?

We at Corpbiz have trained professionals to help you throughout the Secretarial Audit procedure. Our Experts will guide and assist you in whole process of Audit and related services and also ensures the timely and effective completion of your work. For any queries related to Secretarial Audit and related services, feel free to contact our experienced and trained professionals at Corpbiz.

Frequently Asked Questions

Only members of the Institute of Company Secretaries of India having COP (Certificate of Practice) can conduct Secretarial Audit and submit the Secretarial Audit Report in Form MR-3.

Mandatory Provision-Secretarial Audit is mandatory for the below-mentioned companies. Also, the companies are required to prepare the Secretarial Audit Report.

  • Every Listed Company
  • Every public company having a paid-up share capital of 50 crore rupees or more.
  • A public company having a turnover of more than Rs. 250 crore or more.
  • Every company having a borrowing of 100 crores or more.

Voluntary Provision-Companies which are not covered under section 204 may obtain Secretarial Audit Report voluntarily as it provides an independent undertaking of the compliances in the company.

The Prescient Secretarial Audit continually would help the company in commencing corrective measures and strengthening its compliance mechanism and processes. Consequently, the Secretarial Audit should be carried out-

  • Periodically,
  • Quarterly,
  • Half-year and,
  • Annually.

In case of any adverse finding, it is reported on an interim basis to the Board immediately. The Secretarial Audit Report to be annexed with the Board’s report is required to be submitted before the preparation of the Board’s Report.

Secretarial Audit Report is required to be provided in the format lay down in Form MR-3.

Fiscal laws like tax laws and Customs Act, etc needs to be examined while conducting a secretarial audit.

Presently, The authority (ICSI) has not placed any limitation on the number of Secretarial audits that can be conducted by a Practicing Company Secretary in a financial year.

There is no requisite of peer review of Secretarial Auditors.

  • The Secretarial Audit Report should be signed by the Secretarial Auditor who has conducted the Secretarial Audit.
  • In case if the audit is conducted by the firm of Company Secretaries, then by the partner under whose governance the Audit was conducted.

Also, while signing the Secretarial Audit Report, Company Secretary in Practice should ensure that he holds the valid certificate of practice number.

The Secretarial Auditor is required to be appointed using a resolution passed at a duly convened Board meeting. However,it is recommended for Secretarial Auditor to get the letter of engagement from the company.

  • Knowledge
  • Team
  • Documentation and Backup
  • Reliance upon management representation
  • Complying to the timelines
  • Impartial Behavior
  • Maintaining the Audit records

Why Corpbiz

50,000+ Clients Worldwide

50,000+ Clients Worldwide


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4.9 Customer Rating


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300+ Team CA/CS/Lawyers


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