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Role, Functions And Duties of Company Secretary in Secretarial Audit

por Ralph Blalock (2019-08-04)

When a company secretary person undertakes secretarial audit he/she must wear a different hat. The relationship between the practicing company secretary who is going to do the audit and the company which is going to be audited cannot be said to be in the nature of an employer and employee or master and servant or principal and agent. The relationship is on principle to principal basis. Here are some important points to follow by company secretary

While carrying out a secretarial audit, a company secretary in practice (PCS) must approach the job in a structured manner. Before hand, the PCS must prepare a neat note that shows the inputs required for the audit and the process. Such a requirement must be duly communicated to the client and if necessary discussed with the client upfront so as to carry out the audit in a methodical way and complete the audit in a time bound manner.

While carrying out secretarial audit, it will be usual to get attention diverted due to several events, developments that have happened in the company. Sometimes the PCS may be interested in a particular matter and might spend a lot of time on the same as the matter might not have been handled by the PCS. Such things, forms and formats, style of presentation, reports and representatives may drive the PCS into indulging in understanding and appreciating those things instead of proceeding with the Secretarial Audit as per audit plan.

Another important point is the "Attention Deficit" syndrome as the PCS or assistants are prone to apply insufficient attention to the job on hand either by chit chatting or by attending to calls or WhatsApp or other such things. While on audit, the PCS cannot undermine the audit process by falling into those things that will undermine the quality of the audit. Moreover, it will show the auditor in a poor light.

The PCS must prepare well for the audit. When you have any kind of concerns concerning exactly where and the best way to work with socialized.Analysis by the top minds in the financial industry, it is possible to contact us at the website. Before embarking upon the audit, a lot of home work can be done so as to be aware of the status of the client, its directors, its disclosures, its holding / subsidiary / associate and sister concerns. An informed person would need very less time to strike a conversation or map the audit process. Therefore, it is essential to dig out and understand information in the public domain in detail and keep a record and track of them. This will help the PCS to learn about the goals and objectives of the client and appreciate the serious concerns that the client may be facing.
A Secretarial Audit is not a programme intended to advise the client of what should be done and in what manner. It is a programme to study what has been done and to report on the status of specified things. Therefore, attention must be on what and how things have been done. In eagerness to point out issues, a PCS should not frequently pass on observations during the course of audit then and there. The PCS should have the patience to list down the issues, date-wise or quarter-wise or topic-wise and categorise them into material or critical ones and purely technical or minor and procedural ones. For instance, if the company that is under audit is licensed to operate a particular capacity for a particular period by the Pollution Control Board and the PCS finds either the capacity has been exceeded or the consent has not been renewed, the deviation or deficiency is a major and critical one and cannot be taken lightly.

5. One of the issues that always come up in such audits is the difference in the opinion of the client and that of the auditor on the same subject. Expert opinions and case law on the same set of facts give good guidance to the PCS. Therefore, the PCS must learn interpretation techniques too. However, PCS should not completely abstain from applying his mind on the issue. If there is a perfect legality but an unethical matter, the PCS may not be able to do anything. But if there is something which is highly ethical, but it not in accordance with law, the PCS will be in a dilemma. In such cases too, the PCS can apply the materiality or criticality factors.

6. Last but not the least, the PCS must understand that the Secretarial Audit is a major job. What is expected of the PCS is a top level audit with ample focus on Governance, Controls and Processes. This calls for understanding that the audit is not a mere statutory formality. For instance, while auditing a non-banking financial company, complying with KYC norms will certainly be a major area of concern. So the PCS must apply thought and prepare the audit programme on the basis of the nature of business of the company. Profitable entities have crumbled due to Governance failures. So attend to such top level topics. In order to be able to attend to such topics, the PCS must elevate his level of knowledge and expertise first.

Subroto Nayek is a charted consultant working with Businesswindo Services and it's a leading Company Incorporation services provider in India. They specialize in registering a wide range of business entities like Limited Liability Partnership, Private Limited Company, One Person Company, Limited Company, Trust, Society and Section 8 Company. Company registration in Bangalore is easy with the help of businesswindo now.