What is Secretarial Audit

Posted by Enterslice India on January 8th, 2019

Secretarial Audit and it's meaning

Secretarial Audit is an audit which helps to check compliance of various legislations including the companies act 2013 and other laws applicable to company. Secretarial Audit is an effective tool for corporate compliance management.

Objectives and Purpose of Secretarial Audit

Objectives of Secretarial Audit are mentioned below.

1) Secretarial Audit helps to verify and report on compliances of applicable laws.

2) Secretarial Audit helps to point out and detect non-compliances and inadequate compliances.

3) Secretarial Audit protects the interest of directors, officers and stakeholders.

4) Secretarial Audit avoids unwarranted legal actions by any law enforcing agencies and other persons.

Benefits of Secretarial Audit

There are number of benefits of Secretarial Audit which are given below

1)  Secretarial Audit provides confidence level to the directors and Key managerial personnel.

2) Secretarial Audit ensures legal and procedural requirements so the directors are able to concentrate on important business matters.

3)  Secretarial Audit strengthens the goodwill of a company.

4)  Secretarial Audit is an effective governance and compliance risk management tool.

5)  Secretarial Audit helps the investor of companies in matter of analyzing the compliance level of companies.

Applicability of Secretarial Audit

Secretarial Audit is one of the very powerful tool given by Companies Act, 2013 to company secretary professional. Secretarial Audit aims at judging company compliances on a professional opinion basis. Secretarial Audit is mandatory for all listed companies, public companies having paid up capital of Rs 50 crore and above. Secretarial Audit is also mandatory for companies whose annual turnover is Rs 250 Crore or more. Secretarial Audit is also compulsory for a private company which is a subsidiary of public company.

Penalty and punishment for default in Secretarial Audit

If any officer and auditor found in defaulting with provisions of secretarial audit, then as specified in the companies Act, he/she shall be punished with a penalty amount of not less than Rs 1 lakh and it may extend to Rs 5 lakh.

Scope of Secretarial Audit

Secretarial Auditor has to check compliance with the company under certain laws. The list of laws is given below

1) Companies Act, 2013

2) Securities Contract Regulation Act, 1956

3) The depositories Act, 1996

4) Foreign Exchange management Act, 1999

Scope of the secretarial audit is not only limited to the corporate laws applicable to the company but also it extent to all laws applicable to Company.

Number of Secretarial Audit

A company secretary is allowed to do 10 Secretarial audits and if the unit is already peer-reviewed then company can do additional limit of 5 Secretarial audits.

Source url - http://articlescad.com/article/show/63508