**Secretarial audit** is a comprehensive examination of a company's compliance with various statutory and regulatory requirements. Conducted by a qualified Company Secretary (CS), a secretarial audit assesses whether a company adheres to the provisions of corporate laws, regulations, and other applicable legal requirements. Here’s a detailed guide on secretarial audit:

### **1. Understanding Secretarial Audit**

**Definition:**
- A secretarial audit is an independent evaluation of a company's compliance with statutory and regulatory requirements, including corporate laws, rules, and internal policies.

**Purpose:**
- To ensure that the company is adhering to the provisions of the Companies Act, 2013, and other relevant regulations.
- To identify and address any compliance issues, potential risks, or non-compliance areas.

### **2. Legal Framework and Requirements**

**Regulatory Basis:**
- **Companies Act, 2013:** Secretarial audit is mandated by the Companies Act, 2013, specifically for certain classes of companies. 

**Eligibility:**
- All listed companies.
- Other public companies with a paid-up share capital of ₹50 crore or more, or a turnover of ₹250 crore or more.
- Other classes of companies as prescribed by the Ministry of Corporate Affairs (MCA) from time to time.

### **3. Procedure for Secretarial Audit**

#### **Step 1: Appointment of Secretarial Auditor**

1. **Appointment:**
   - The board of directors must appoint a qualified Company Secretary in Practice (C.S.) as the secretarial auditor.

2. **Tenure:**
   - The appointment is generally for one year, and the auditor must be reappointed annually.

#### **Step 2: Planning the Audit**

1. **Audit Scope:**
   - Define the scope of the audit, including the areas to be covered, such as compliance with the Companies Act, 2013, SEBI regulations, and other relevant laws.

2. **Preparation:**
   - Collect and review all relevant documents, including the company's Articles of Association (AoA), Memorandum of Association (MoA), board meeting minutes, registers, and compliance records.

#### **Step 3: Conducting the Audit**

1. **Document Review:**
   - Review statutory records, including minutes of board meetings, general meetings, and resolutions.
   - Examine compliance with various regulatory requirements, such as filing of returns, payment of fees, and adherence to corporate governance norms.

2. **Compliance Verification:**
   - Verify compliance with the Companies Act, 2013, and other applicable laws, such as the Securities and Exchange Board of India (SEBI) regulations for listed companies.

3. **Interviews and Discussions:**
   - Conduct interviews with key management personnel and review internal controls and compliance mechanisms.

#### **Step 4: Preparation of Secretarial Audit Report**

1. **Report Drafting:**
   - Prepare a detailed report outlining the findings of the audit, including any areas of non-compliance, weaknesses, and recommendations for improvement.

2. **Report Contents:**
   - The report should include details of the audit, findings on compliance with statutory requirements, and observations on the company's governance practices.

3. **Submission:**
   - Submit the secretarial audit report to the board of directors and file it with the Registrar of Companies (RoC) as part of the annual return.

### **4. Post-Audit Actions**

1. **Addressing Issues:**
   - The company should address any issues or non-compliance areas identified in the audit report and implement corrective actions.

2. **Continuous Improvement:**
   - Use the audit findings to improve compliance processes, internal controls, and governance practices.

### **5. Common Challenges**

1. **Complex Regulations:**
   - Navigating through complex regulatory requirements can be challenging, especially for companies with extensive operations.

2. **Document Accuracy:**
   - Ensuring the accuracy and completeness of statutory records and documentation is crucial for a successful audit.

3. **Timely Compliance:**
   - Meeting deadlines for filing returns and other compliance requirements can be demanding.

### **6. Best Practices**

1. **Engage Experienced Auditors:**
   - Appoint qualified and experienced Company Secretaries to conduct the audit and provide valuable insights.

2. **Maintain Accurate Records:**
   - Keep comprehensive and up-to-date records of all statutory and regulatory compliance activities.

3. **Regular Internal Audits:**
   - Conduct regular internal audits to identify and address compliance issues before the secretarial audit.

4. **Stay Updated:**
   - Stay informed about changes in laws and regulations to ensure ongoing compliance.

### **7. Conclusion**

Secretarial audit is a critical aspect of corporate governance and compliance management. By adhering to statutory requirements and engaging in regular audits, companies can ensure they are operating within the legal framework, identify potential issues early, and enhance their overall governance practices. Regular secretarial audits not only help in maintaining compliance but also contribute to the company’s long-term success and integrity.

Secretarial Audit Fees