How does a PCS plan a Secretarial Audit?
Engagement letter → understanding of business → identification of applicable laws → risk-based sampling → audit evidence → drafting MR-3 → communication with management.
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Secretarial compliance for listed companies — annual reporting matrix
Listed entities must file Annual Secretarial Compliance Report (Reg 24A) signed by a PCS, alongside MR-3, within 60 days of year-end. Covers all SEBI regulations applicable.
Applicability of Secretarial Audit under Section 204
Every listed company, every public company with paid-up capital ≥ ₹50 cr or turnover ≥ ₹250 cr, and every company having outstanding loans/borrowings ≥ ₹100 cr.
Scope of Secretarial Audit — laws covered in MR-3
Companies Act, SCRA, Depositories Act, FEMA (FDI/ODI/ECB), SEBI regulations, industry-specific laws and Secretarial Standards (SS-1, SS-2).
Difference between Statutory Audit and Secretarial Audit
Statutory audit: financial statements by CA under §139. Secretarial audit: legal compliance by PCS under §204. Different scope, statutes and signatories.
Auditing Standards issued by ICSI for Secretarial Audit
CSAS-1 (Auditing), CSAS-2 (Engagement), CSAS-3 (Audit Procedures), CSAS-4 (Audit Reporting). Effective from April 2020 for §204 audits.