CSAS-4-Auditing Standard on Secretarial Audit: An Overview

Sr. No

Particulars

What to do in a Secretarial Audit

How to do

1

Identification of applicable Laws

While conducting Secretarial Audit, Auditor shall take note of industry specific laws as well as other laws as may be applicable to the auditee.

1. Laws applicable to the auditee can be identified and verified by the auditor himself; and

2. Identification and segregation of the Laws can also be based on the view of the management of the company;

2

Verification of corporate conduct and compliance of laws

1. Auditor shall identify events/corporate actions which took place during the year under review.

2. Auditor shall verify event and calendar based compliance.

1. Refer to the website, database, statutory records of the auditee and database or website of the regulators;

2. Audit may also refer to the other sources which he deems relevant;

3

Verification of the composition of the Board of Directors

1. Verify minimum and maximum strength of the board.
2. Verify overall composition of the Board.
3. Verify optimum combination of the board i.e. number of non-executive, executive, independent, women directors. Etc.
4. Whether Directors  are fulfilling the eligibility criteria and are not disqualified to act as directors.
5. Verify constitution and composition of Committees of the Board.

Refer to:

1. The Companies Act, 2013 and  rules made there under;
2. SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015;
3. Articles of Association of the Company;
4. Agreement with the Lenders /Investors of the auditee;
5. Internal Policies of the Company;
6. Board decisions;
7. Shareholder's decisions;

4

Verification of the Process of the Board of Directors

1. Verify the decisions of the Board.
2. Verify the decisions of the committees of the Board.

Refer to:

1. Applicable Laws, rules, regulations, guidelines and standards;
2. Defined internal processes of the Company;

5.

Assessment of the System and Process

1. Checking of framework of legal and procedural compliance.

1. Assess Effectiveness and adequacy of the system and processes;
2. Review of the records of the auditee;
3. Identification of the compliance responsibility centers, control points, flow of information, reporting of non-compliance;
4. Assess compliance mechanism;
5. Analyse instances of non-compliance, fine/penalties, adverse remarks, order passed by the regulatory authorities;

6.

Detection of Fraud

1. Auditor shall exercise professional judgment and maintain professional skepticism to detect and report frauds.

1. Perusal of internal control systems;
2. Check complaint received under whistle blower mechanism;
3. Refer to the reports of the other auditors;
4. Collect sufficient evidences to substantiate the commission of a fraud;

7.

Reporting of Fraud

1. In case of sufficient reason to believe commission of fraud the auditor shall report the fraud.

2. Check for the other frauds, if any, reported by the other auditors.

1. As per the provisions of the Companies Act, 2013, report the fraud to:

1. Audit Committee;
2. Board of Directors
3. Central Government;

2. Include the details of frauds detected by the auditor himself as well as other auditors in Secretarial Audit Report;
3. Check whether any comments are given by Audit Committee/ Board in the Board's report regarding the reported frauds.

8.

Events/actions having major bearing on Auditee's affairs

1. Identify and report all events/actions if it affects its going concern or alters the charter or capital structure or management or business operation or control, etc. of the auditee.

Refer to:

1. applicable laws, act, rules, regulations, guidelines, standards, etc.