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Secretarial Audit is a compliance audit. It is a part of total compliance management in an organization. It is an effective tool when it comes to corporate compliance management. In this article we shall know more about Secretarial audit in India, including its process and benefits.
It is a process to check compliance to the provisions of the law, rules, and regulations, maintenance of books, etc. by an independent professional to make sure that the company complies with the legal requirements and procedural needs and also follows the due process. It’s a mechanism to monitor compliance with the requirements of the stated law.
The objective of Secretarial Audit can be summarized as:
The mandatory provisions regarding applicability of secretarial audit are:
The scope comprises verification of the compliances under the following:
The appointment of the secretarial auditor is made by following the below mentioned steps:
The process of such audit is as given below:
It may be noted that while preparing the audit report, the secretarial auditor shall consider:
The following documents are required:
In case where a company or an officer of such company or the company secretary in practice, breaches the provisions then the company or every officer of the company or the company secretary in practice who makes such breach, shall be punished with fine of minimum 1 lakh rupees and maximum of 5 lakh rupees.
The benefits of secretarial audit in India can be summed as under:
At present, secretarial audit in India is mandatory for listed companies and large public companies in terms of their paid up capital and turnover. The move is to take it to private companies also. Private limited companies have less disclosure requirements as compared to a public limited companies. This audit is applicable on private companies that’s subsidiary of listed entities.
Experts have welcomed this move as they expect it will improve compliance. The spate of failures of corporate governance in important entities in the past has necessitated the need to tighten the rules and beef up the oversight of the auditing and rating agencies while addressing the liquidity issues of the business.
Read our article:Why Secretarial Audit is Mandatory for Companies?
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