Secretarial Audit is Compliance Audit; it is a part of total Compliance Management in an organization. The Secretarial Audit is an effective tool for Corporate Compliance Management. It is an audit by Company Secretary in Practice. It helps ensure timely corrective measures when non-compliance is detected. Secretarial Audit is always in the better interest of every corporate management as, an independent Professional will certify that the company has carried out the compliances under the Act. In terms of Section 143 Secretarial Auditor shall have all the powers & duties as conferred upon the statutory Auditor of the Company of the Companies Act, 2013.
As per Companies Act, 2013:
Section 204(1) of Companies Act, 2013 introduces concept of Secretarial Audit Report by Company Secretary in practice is a welcome step. It is a step towards good corporate governance and in line with the provisions of Clause 49-C (iii) of the Listing Agreement of Stock Exchanges i.e. part of Corporate Governance which states that the Board shall periodically review legal compliance reports prepared by the company as well as steps taken by the company to cure instances of non-compliances.
Companies to which secretarial audit apply:
All listed Companies and such Companies as may be prescribed (mentioned in Rule 9/XIII) shall have the Secretarial Audit done by a Company Secretary in practice. The Secretarial Audit Report shall be annexed with the Board Report.
RULE 9/XIII prescribes the following Companies:-
The Board of Directors in their report shall explain the qualification or observation or remarks made by the Company Secretary in Practice.
The Secretarial Audit was earlier available Under Section 383A of the Companies Act, 1956 but limited to companies having paid up capital between Rs. 10 Lacs to Rs.500 Lacs only. This was named as “Compliance Certificate” and was limited in its scope also.
|A secretarial auditor has to check compliances of the company under following laws:-|
Secretarial audit can be done by:
Only Practicing Company Secretary can be appointed as the secretarial auditor of the Company.
Secretarial Audit Report:
The Secretarial Audit Report shall be in the Form MR-3 as prescribed in the Rules.
Consequences for Non-Compliance:-
As per Section 143(15) of Companies Act, 2013 if secretarial auditor has a reason to believe that an offence involving fraud is being or has been committed against the Company by its Officers or Employees he shall report the same to CG. Failure to do shall attract a fine which shall not be less than 1 lakh but which may extend to Rs. 25 lakhs.
It shall be the duty of the Co. to give all assistance and facilities to CSP for auditing secretarial & related records of the Co. If Company or any officer or the Company Secretary in practice contravenes the provision then Company or every officer or the Company Secretary in practice shall be punishable with fine which shall not be less than 1 lakh but which may extend to 5lakhs.