Secretarial audit
This query is : Resolved
17 December 2014
In the secretarial audit report will the PCS has to certify that the company is complying with all the other laws applicable to it or he can pick and choose and certify on only those laws with which he is conversant.Can u express your personal view on the matter.
17 December 2014
The secretarial auditor has to verify whether diverse requirements under applicable laws have been complied with.
The report shall contain the opinion on the statutory compliances examined by the
auditor and shall state whether in his opinion the Company is carrying out/not carrying out due compliances
of the applicable provisions of the various laws.
If the secretarial auditor is unable to express an opinion on any matter, he should mention that he is unable to express an opinion on that matter and the reasons therefor.
The report shall contain the opinion on the statutory compliances examined by the
auditor and shall state whether in his opinion the Company is carrying out/not carrying out due compliances
of the applicable provisions of the various laws.
If the secretarial auditor is unable to express an opinion on any matter, he should mention that he is unable to express an opinion on that matter and the reasons therefor.
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17 December 2014
Thanks for your comments.Secretarial Audit report format as given in MR-3 stipulates that the Report should mention about compliance of other laws which are specifically applicable to the company.A law becomes specifically applicable to a company based on their nature of activities e.g. Mines Act applicable to a Coal Mining company.It is not practicable for an auditor to certify that a company is complying with all the provisions of all the applicable laws.
18 December 2014
MR-3 inter-alia stipulates that the auditor has to report compliance of other laws as specifically applicable to the company.Intention of the law seems to be to include auditors comments only on those laws which are specifically applicable to a particular company based on its nature of activities.For example,if a company is engaged in hotel business,the auditor has to report about compliance of Food Safety and Standard Act, 2006,in the case of a coal mining company,the auditor has to report about compliance of Coal Mines Act,1979.He is not required to make report on compliance of general laws like Bonus Act,Payment of Gratuity Act,Industrial disputes act etc., which are applicable to almost all companies employing 20 or more persons.
18 December 2014
The scope of Secretarial Audit comprises verification of the compliances under the following enactments,rules, regulations, notifications and guidelines
(i) The Companies Act, 2013 (the Act) and the Rules made thereunder:
(ii) Other major Acts and Regulations
a. The Securities Contracts (Regulation) Act, 1956
b. The Depositories Act, 1996
c. The Foreign Exchange Management Act, 1999
d. The regulations and guidelines made under the Securities and Exchange Board of India Act, 1992 (where applicable).
e. The Listing Agreement, (where applicable).
(iii) Other Applicable Laws include:
• Competition Law
• Labour Laws
• Environmental Laws
• Industry/sector Specific Laws
• Other applicable state Laws
The Secretarial Auditor should prepare a list of specific laws as applicable to the company whose secretarial audit is being conducted and verify compliance with the same.
(i) The Companies Act, 2013 (the Act) and the Rules made thereunder:
(ii) Other major Acts and Regulations
a. The Securities Contracts (Regulation) Act, 1956
b. The Depositories Act, 1996
c. The Foreign Exchange Management Act, 1999
d. The regulations and guidelines made under the Securities and Exchange Board of India Act, 1992 (where applicable).
e. The Listing Agreement, (where applicable).
(iii) Other Applicable Laws include:
• Competition Law
• Labour Laws
• Environmental Laws
• Industry/sector Specific Laws
• Other applicable state Laws
The Secretarial Auditor should prepare a list of specific laws as applicable to the company whose secretarial audit is being conducted and verify compliance with the same.
18 December 2014
Mr. Mitesh
The above format has been suggested by the
ICSI in their Guidance Note on secretarial audit.It is very clear.However,in the format prescribed by the MCA in MR-3 inter-alia stipulates that the auditor has to report compliance of other laws as specifically applicable to the company. PCS has to submit the Report as per MR-3.That is why I have raised this query.
The above format has been suggested by the
ICSI in their Guidance Note on secretarial audit.It is very clear.However,in the format prescribed by the MCA in MR-3 inter-alia stipulates that the auditor has to report compliance of other laws as specifically applicable to the company. PCS has to submit the Report as per MR-3.That is why I have raised this query.
23 December 2014
ICSI circular 22nd December,2014 inter-alia contained clarification on other-laws relating to secretarial audit.However,one thing is still missing.re:compliance of ss.All r ecent tender notice of various companies covers audit of the same also.Inst. has kept silent on it probably because,it has not yet been made mandatory.
This has been included in MR-3 and several PSUs inviting tenders have included them in the scope of audit.Can PCS exclude it from his scope of audit or clarify that subject to its approval by the GOI he will cover it in his Report.
This has been included in MR-3 and several PSUs inviting tenders have included them in the scope of audit.Can PCS exclude it from his scope of audit or clarify that subject to its approval by the GOI he will cover it in his Report.
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