Secretarial Audit

Requirements of Secretarial Auditor

1. Appointment of Secretarial Auditor:

The Board of Directors is liable for choosing a Secretarial Auditor who must be a member of the Institute of Company Secretaries of India (ICSI). This selection is crucial to make sure the independence and understanding of the auditor in completing a complete evaluation of the employer's office data and practices.

2. Audit Scope:

The Secretarial Auditor's scope includes a full study of the company's secretarial records, such as regulatory files, minutes of meetings, and yearly reports. This detailed examination tries to verify agreement with legal and governmental requirements, ensuring that the company works within the set structure and keeps accurate and up-to-date records.

3. Audit Report:

Following the audit, the Secretarial Auditor is expected to send a full audit report to the Board of Directors. This report shows the company's secretarial compliance state, noting any non-compliances or flaws found during the audit process. The audit report serves as a critical record that provides insights into the company's respect for legal and procedural requirements, helping stakeholders assess the company's governance and compliance practices.

Eligibility Criteria for Secretarial Audit

1. Company Type:

Secretarial Audit is needed for public companies and certain other specific groups of companies as per the Companies Act, 2013. This rule ensures that companies with a major effect on the market and clients stick to strict safety standards to keep openness and responsibility in their operations.

2. Net Worth:

Companies with a net worth of INR 500 crore or more fall under the necessary requirements for having a Secretarial Audit. This financial level shows the size and financial power of the company, warranting a full review of its office records and practices to ensure compliance with legal and regulatory requirements.

3. Turnover:

Companies with an income of INR 1000 crore or more are also needed to undergo a Secretarial Audit. This turnover level shows the substantial practical size and financial activity of the company, requiring a thorough review of its office compliance to reduce risks and ensure obedience to legal frameworks.

Documents Required for Secretarial Audit:

1. Board Resolution: A Board Resolution is needed to choose the Secretarial Auditor. This choice should be made with the Registrar of Companies (ROC) within the given time range.

2. Auditor's information: The Secretarial Auditor's ICSI registration information and professional skills are important papers to be obtained. This information is crucial to ensure the auditor's licence and ability to perform the audit.

3. Audit Report: The Secretarial Auditor's final report is an important record that includes notes, advice, and compliance status. This report should be given to the Board of Directors and kept for a period of 8 years from the date of signing of the Auditor’s Report.

Additional Documents and Checks for Secretarial Audit:

1. Memorandum and Articles of Association: These papers are vital to a company's survival and control. They explain the company's goal, powers, and rules for internal management.

2. Forms made with the Registrar of Companies: These forms provide important information about the company's organisation, management, and cash position. They include records related to shared assignments, board nominations, and yearly returns.

3. Statutory Registers: A company's compliance depends on keeping accurate and up-to-date statutory registers. The share transfer register, the director and key management personnel register, and the cost register are some examples of these documents.

4. Meeting Minutes: These provide insights into the company's governance and decision-making procedures. Usually, they are available for the board, general meetings, audit committees, and other committee minutes.

5. Financial statements, such as balance sheets, income and loss accounts, and cash flow statements, are crucial for understanding a company's financial well-being and success.

6. Agreements and Contracts: It is important to get and review copies of any agreements and contracts that the business engages with any related parties. This covers professional partnership arrangements, lending agreements, and joint business deals.

Orders and Notices from Regulatory Bodies: Any orders or notices received from regulatory bodies, such as the High Court, Tribunal, or other regulatory authorities, should be gotten and studied.

Checklist for Secretarial Audit

• Appointment of Secretarial Auditor: Ensure the appointment of a trained Secretarial Auditor who is a member of the Institute of Company Secretaries of India (ICSI). This decision should be made through a Board Resolution, and the information of the chosen auditor should be received, including their ICSI registration records and professional skills.
• Audit Scope: Define the audit scope, covering all important secretarial records and practices to be reviewed by the Secretarial Auditor. This includes required files, minutes of meetings, monthly reports, and other office records. The scope should be thorough and cover all legal and organisational requirements applicable to the company.
• Audit Report: Review and address the Secretarial Auditor's findings and recommendations. This includes taking suitable steps to handle any non-compliance or flaws found during the audit process. The Secretarial Auditor's final report should be received and read, and any comments, ideas, and compliance status should be handled quickly.
• Documentation: Ensure that each one important files are gathered and maintained, such as the Memorandum and Articles of Association, paperwork filed with the Registrar of Companies, statutory registers, minutes of meetings, bank statements, contracts and agreements, and orders and notices from regulatory bodies.
• Compliance: Ensure that all legal and procedural requirements are met, which include preserving correct and updated facts, making meetings, and writing statutory reviews.
• Risk Management: Identify and handle any viable risks associated with secretarial compliance, consisting of legal, company, financial, and social threats.
• Governance Practices: Ensure that the right governance practices are in place, consisting of responsibility, duty, and decision-making strategies.
• Stakeholder Trust: Foster confidence among stakeholders, such as buyers, customers, and authority officers, by maintaining legal compliance and backing precise governance practices.
• Sustainable Growth: Ensure sustainable increase and long-time period achievements for the company via preserving secretarial compliance, decreasing risks, and supporting right governance practices.