Secretarial audit, as an impartial and open procedure, protects the company from legal entanglements by vigilantly monitoring the observance of rules, regulations, and laws within the company. By highlighting the organization’s impeccable reputation, it also fosters a strong sense of confidence among its recipients. This article has covered the topic of the applicability of secretarial audits.
A company secretary chosen by the firm in accordance with the 2014 company (meeting of the board and its functions) regulations serves as the secretarial auditor in the majority of cases. It carries out the tasks associated with secretarial audit in accordance with Securities and Exchange Board of India Rule 24A.
Importance of a Secretarial audit report
Through Secretarial audit reports, the organization’s different stakeholders, including management, regulators, shareholders, and other stakeholders, can increase their sense of confidence in one another. By learning about the gaps in compliance with the organization’s rules through this secretarial audit report, the organization’s statutory and regulatory defects are promptly fixed. The company has a distinct edge in risk management in such a circumstance.
Which businesses must do secretarial audits?
Following is an explanation of the required provisions pertaining to the applicability of secretarial audit:
Each listed business
- All publicly traded companies with paid-up share capital exceeding RS 50 crore
- Revenue of less than RS 250 crore A secretarial audit is required if any of the requirements is met.
- Private firms and smaller publicly traded corporations are not required to conduct a secretarial audit. 4. To ensure compliance and reduce the risk of noncompliance, these businesses may implement secretarial audit methods.
Secretary Audit Applicables:
- Secretarial audits examine the organization’s adherence to norms and regulations. As a result, the company maintains a high level of legal vigilance and is still in a solid legal position.
- The organization’s various stakeholders, including the promoters, executive directors, business regulators, governmental agencies, investors, financial institutions, etc., receive reliable information about the organisation, boosting their confidence in it and enabling them to make critical decisions for its expansion.
- The secretarial audit operates under the tenet that “prevention is better than cure,” which aids in the smooth operation of the business.
- By quickly identifying the organization’s flaws, secretarial audits assist in controlling risk within the context of the organisation. As a result, the organization’s employees’, management’s, and investors’ interests are safeguarded.
- Secretarial audits aid in the organization’s risk management, control, and plan-making processes.
- Secretarial audits improve the organization’s image, which attracts investors and increases investment. Better investments aid in the organization’s expansion.
- Secretarial audits look at the organization’s adherence to the law, which aids senior management and the board of directors in concentrating on the operations of the firm and developing long-term strategies.
- A strong secretarial audit prevents the organisation from running afoul of the law since the secretarial auditor maintains a close check on the legal requirements’ observance. The company’s higher-level management saves time and resources as a result of this.
- A secretarial audit establishes a state of level secretarial standards compliance. This increases the organization’s operations’ openness and fairness.
- Secretarial audit stands out as a methodical method for every organization’s legal and regulatory issues.
- Any person or business owner intending to buy or acquire a firm may rely on secretarial audit as a credible source.
- A secretarial audit shields the company against penalties, legal action, and other negative consequences. This guarantees the best possible use of the company’s resources.