What Is Secretarial Audit?

What Is Secretarial Audit?

Secretarial Audit is a process to check compliances with the provisions of various laws/rules/ procedures/ regulations, maintenance of books, accounting records etc. A Secretarial Audit needs to be done by an independent professional in order to ensure that the organization has complied with all the legal & procedural requirements along with following due processes. It is a mechanism to check and monitor compliances with the requirements of stated laws and processes.

Before the introduction of Companies Act 2013, Secretarial Audit was not mandatory for companies. Section 204 of the Companies Act 2013 laid the rule that Secretarial Audit is mandatory for certain companies.  In Companies Act 2013, the requirement of Compliance Certificate has been withdrawn and a revised and wider concept of Secretarial Audit Report has been inserted in Section 204. Secretarial Audit has been laid to safeguard the interests of the management of a corporate.

The scope of Secretarial Audit arises in different circumstances – five different laws:

  1. The Companies Act, 2013 (the Act) and the rules made thereunder.
  2. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made thereunder.
  3. The Depositories Act, 1996 and the Regulations and by-laws framed thereunder.
  4. 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.
  5. Rules and regulations framed under the Security Exchange Board of India, 1992, (SEBI Act).

Why Secretarial Audit Is Necessary?

Timely audit of compliance reduces risks along with potential cost of non-compliance. It also helps to build a better corporate image. Based on the secretarial audit an independent professional make necessary recommendations and remedies. In a nutshell, the primary objective of Secretarial Audit is to safeguard the interests of Directors of a Company, shareholders, creditors, employees, customers and more.



Visit HireCA.com Now