What is Secretarial Audit? – its Advantages, Features of Company Secretarial Audit
April 28, 2022
“What is Secretarial Audit?”, Secretarial Audit Applicability and Appointment of Secretarial Auditor
Table of Content
A compliance audit is a secretarial audit. It is an aspect of an organization’s overall compliance management. It is a useful tool for corporate compliance management, as it aids in the detection of non-compliance and the implementation of corrective actions. An article on “What is Secretarial Audit?”, Secretarial Audit Applicability, information on Appointment of Secretarial Auditor, and Its advantages & Features of company Secretarial Audit.
What is a Secretarial Audit?
The Secretarial Audit offers a judgment on whether the firm has suitable systems and processes in place to monitor and assure compliance with applicable rules, regulations, laws, and guidelines, consistent with the organization’s size and operations. Secretarial auditing aids in the detection of non-compliance and the implementation of corrective actions. It examines the company’s adherence to good corporate practices.
As a result, it is an objective and independent assurance designed to add value to the Company’s operations. It contributes to the achievement of the organization’s goals by using a systematic, disciplined approach to evaluating and improving the efficacy of risk management, control, and governance systems.
Secretarial Audit so gives stakeholders, regulators, and management the essential assurances about good governance, statutory compliance, and the existence of competent and adequate systems and processes.
Features of Company Secretarial Audit
It aids in the detection of non-compliance and the implementation of corrective actions.
It examines the company’s adherence to good corporate practices.
It is a stand-alone procedure designed to create value and improve the Company’s operations.
It aids in the achievement of the company’s goals by using a systematic, productive method to evaluate the performance of risk management, control, and governance systems.
4 main Objectives of Company Secretarial Audit
Advantages of Company Secretarial Audit
An effective technique for ensuring that legal and procedural requirements are met.
Provides directors and key management personnel with a sense of security.
Secretarial Audit ensures that legal and procedural requirements are met, allowing directors to focus on more critical business issues.
Increase a company’s goodwill with regulators and stakeholders.
Secretarial auditing is a useful technique for risk management in governance and compliance.
It aids the investor in determining the level of company compliance, ultimately enhancing the company’s reputation.
Secretarial Audit Applicability
A secretarial Audit is required for the following businesses. In addition, to other annual reports organizations must prepare a Secretarial Audit Report.
Every Company with a debt of at least 100 crores rupees.
Each and every Listed Company
A publicly traded firm with a turnover of at least INR 250 crore.
Every Public Company that has a paid-up share capital of at least 50 crore rupees.
Information on Appointment of Secretarial Auditor
Secretarial Audits and Reports can only be conducted by ICSI members with a certificate of practice.
A secretarial auditor must be appointed by a board resolution, according to rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014. Within 30 days of passing the resolution, it must be filed with the Registrar in e-form MGT-14.
It is suggested that a Secretarial Auditor be hired at the start of the fiscal year. The Secretarial Auditor can provide the Board with quarterly reports on the compliance of numerous laws and regulations.
FAQs (Frequently Asked Questions)
1. Is a Letter of Representation from the Auditee Company required for the Secretarial Auditor?
A management representative letter from the Auditee company is strongly recommended by the Company Secretary in Practice. Senior management (Company Secretary/Senior Management/Managing Director) may sign the letter, as they would ordinarily have the authority to do so. This letter of representation can be used by the Secretarial Auditor as part of his audit evidence.
2. How often is a Secretarial Audit performed?
The Prescient Secretarial Audit would assist the organization in implementing corrective actions and enhancing its compliance mechanisms and processes on a regular basis. As a result, the Secretarial Audit should be completed- Quarterly, Half-year, and Annually are all examples of periodicity.
Any negative findings are immediately communicated to the Board on an interim basis. The Secretarial Audit Report, which will be annexed to the Board’s report, must be provided before the Board’s Report is prepared.
3. What is the Secretarial Audit Report’s format?
The Secretarial Audit Report must be submitted in the format outlined in Form MR-3.
4. Under the Companies Act of 2013, what are the rights and responsibilities of the Secretarial Auditor?
The functions and responsibilities of Auditors are outlined in Section 143 of the Companies Act of 2013. The provisions of this section apply mutatis mutandis (it is a Latin phrase for – With things changed that should be changed) to the Company Secretary in Practice undertaking Secretarial Audit under section 204, according to subsection (14) of the section.
Private companies and small public companies are not required to conduct Secretarial Audits. These businesses might use secretarial auditing to ensure compliance and avoid the risks that come with non-compliance. It improves a company’s image and goodwill in the eyes of regulators and stakeholders. It can be used as a governance tool or a compliance risk management tool.
Appointment of Auditor
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