A secretarial audit is a key part of a company’s compliance system. It works as a smart tool to help businesses stay on the right side of the law. This process not only checks if your company is following the required rules but also helps spot any mistakes or gaps so you can fix them in time. The secretarial audit involves checking whether a company is meeting all the legal requirements set by various laws and guidelines. It also looks into the way records are maintained, whether proper procedures are followed, and if the necessary books and documents are kept up to date. This audit is usually carried out by an independent expert who is qualified to do so. The main goal is to make sure everything is legally sound and all rules are being followed properly. It’s a reliable way to monitor how well a company is following the law.

A secretarial audit report is prepared and signed by a certified Company Secretary. This report confirms whether a company is sticking to all the applicable laws and regulatory requirements. It provides a complete review of the company’s legal and governance practices, and highlights any risks or areas where the company can improve. It also gives useful suggestions to strengthen compliance. For some types of companies in India, getting a secretarial audit report is not optional—it’s a legal requirement under the Companies Act, 2013. Only professionals who are members of the Institute of Company Secretaries of India (ICSI) and hold a valid certificate of practice are allowed to carry out secretarial audits. These experts are trained and authorized to evaluate a company’s legal compliance and submit an official audit report.

When is Secretarial Audit Required?

Here’s when a secretarial audit becomes necessary:

• If your company is listed on a stock exchange, it must undergo a secretarial audit every year.
• If you run a public company with ₹50 crore or more in paid-up capital, or ₹250 crore or more in annual turnover, you are required to get an annual audit done.
• Private companies that meet the same financial limits (₹50 crore capital or ₹250 crore turnover) must also conduct a yearly secretarial audit.
• Any company—public or private—that has outstanding loans or borrowings of ₹100 crore or more from banks or financial institutions must get a secretarial audit every year.

What Does the Secretarial Audit Cover?

The scope of a secretarial audit refers to everything that gets checked during the process. Here’s what’s usually included:

• Reviewing the company’s compliance with applicable laws and internal rules.
• Checking the corporate governance structure to see if it aligns with good practices.
• Verifying if all secretarial procedures and formalities are properly followed.
• Making sure that stakeholders’ interests—including those of shareholders and the public—are protected.

This audit is performed by a certified company secretary who will assess how well the business is managing its legal responsibilities. They also provide advice on how the company can do better in terms of governance and compliance. The exact details of what’s included in the audit might change depending on the type and size of the company, and the industry it works in.

Who Can Be Appointed as a Secretarial Auditor?

To be appointed as a secretarial auditor, the person must be a certified professional who is a member of the Institute of Company Secretaries of India (ICSI). They should also hold a valid Certificate of Practice (CoP) issued by the institute. Only professionals who meet these standards are allowed to carry out secretarial audits for companies. The person must also have successfully completed training in secretarial audits organized by the ICSI. This training ensures they fully understand the responsibilities and the scope of the audit. It’s important that the auditor remains completely independent—there should be no personal or financial interests that could affect their judgment or objectivity. This helps ensure a fair and unbiased review. Additionally, the auditor should have solid experience in handling company compliance and secretarial tasks. Their track record should be clean, meaning they must not have been convicted of any crime involving dishonesty or misconduct. The individual must not have been found guilty of any professional wrongdoing by ICSI in the past. Their reputation in the professional world should reflect integrity, reliability, and strong ethical standards. Lastly, the auditor must be well-equipped with the required tools, systems, and staff needed to carry out a detailed audit efficiently. They must also strictly follow the professional ethics and code of conduct laid down by ICSI.

Step-by-Step Guide to the Secretarial Audit Process

Step 1: Planning the Audit
The first stage is to create a detailed checklist that outlines all the rules and regulations the company needs to follow. This list becomes the foundation of the entire audit process.

Step 2: Verifying Compliance
The auditor goes through company records and operations to see if everything is in line with the checklist. This step involves a deep dive into various filings, approvals, minutes, registers, and other statutory records.

Step 3: Sharing Findings with Management
Once the review is complete, the auditor shares their observations with the company’s management. If there are any areas of concern or legal gaps, the auditor also suggests ways to correct them.

Step 4: Rectifying Any Issues
The company’s management is expected to take appropriate actions to fix any mistakes or non-compliances identified in the audit. This helps avoid future penalties and ensures better corporate governance.

Step 5: Filing the Final Audit Report
In the final step, the completed audit report is submitted to the appropriate regulatory bodies. This report serves as an official record showing whether or not the company is following all the applicable laws and guidelines.