What is a secretarial audit?

Under the companies’ act 2013; secretarial audit is done to check various compliances and other applicable laws on the company. The secretarial audit is mandatory for companies. In the case of contravention of secretary audit by a company, the officer in charge will be held punishable.

Rule 9 of rules of companies 2014 govern the report of secretarial audit and the report should be made according to it only. This secretarial audit is done to check or regulate the compliances of the company for various legislations and laws applicable to the company.

Why secretaries audit necessary for a company?

With such a vast number of companies, it has become very essential for companies to stay ahead. Conforming to all the rules whether standards or laws are necessary. The rule and regulations are mandatory for the company to work smoothly and seamlessly. Any contravention by the company to these rules can be hefty for the company. These rules are made to regulate the working of a company and keep a check on the compliances of the company. The secretarial audit is done to make sure the company has agreed and followed the legal and procedural requirements and is also following all the laws and processes. It is a monitor mechanism performed by the companies itself to check out for the deformities in the company and rectify the errors for a strong compliance system in any organization.

This monitoring or preparation of secretarial audit of the company can also be done by any member of an organization of companies’ secretaries of India. The final report of the secretary audit will be sent to the company for further evaluation.

The secretarial audit is done for the following objectives –

  • To analyze the compliances and report them
  • To outlook non-compliance and the ones that are inadequate
  • Forgiving proper protection to the interests of the officers and directors
  • To protect the company from any unnecessary or harmful legal actions in the future for non-fulfillment of rules and laws. This also decreases the consequences of non-compliance
  • To motivate the company to comply much better and also to realize that to what extent the company has complied with the rules and laws made for it.
  • It also helps to maintain an effective and strong compliance mechanism for the company
  • To enhance the speed of compliance and also to increase the quality of compliance
  • It enhances the working efficiency of the company and also increases the level of confidence in the management committee of the company.
Forgetting the accurate information about the company’s compliance policy, regular checking is needed. A robust compliance mechanism can only be formed using the secretarial audit. It’s always better to find the fault in the working of your company rather than exempt from the consequences of it.
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