View
0
Download
0
Category
Preview:
Citation preview
Class Room Series
On SECRETARIAL AUDIT
CS Ranjeet Pandey - FCS, LL.B.
Central Council Member- ICSI
Ranjeet Pandey & Associates
Company Secretaries
Mobile: 09810558049, 011 – 46074119
e-mail: cs.ranjeet@gmail.com
Key Takeaways
Promoters Protection of owner’s stake from being exposed to
unintended regulatory risk.
Management Effective and efficient monitoring of performance of
Compliance Management Team.
Independent
Directors
Mitigation of Regulatory Risk.
Government
Authorities
Reducing the burden in regulating compliance
management.
Investors Confidence booster for existing. Enables
prospective investors to take informed decision.
CS Ranjeet Pandey, Practising Company Secretary
Powers & Duties of SA
Powers & Duties (section 143):
Access of Books of Accounts, etc.
Seeking information and explanation.
Enquire into Loan and Advances, secured or not / Book Entries other financial transactions – terms not prejudicial to Interest of the Company.
Access to records of all subsidiary companies;
CS Ranjeet Pandey, Practising Company Secretary
Powers & Duties of SA
Powers & Duties (section 143): Continued…
Negative comments / qualifications in SAR should be supported with reasons.
Verify compliances of decision of Board and Shareholders;
Verification of Secretarial Standard;
Form an opinion on True & Fair view in regard to Non-Fin Transactions;
Power to Report Fraud to CG [Section 143(12)] – Non Compliance – fine INR 1 Lac to INR 25 Lac.
CS Ranjeet Pandey, Practising Company Secretary
Section 141(3): It is desirable that the disqualifications for appointment as prescribed under section 143(3) should be taken care of and following persons shall not be eligible for appointment as SAs: 1) A body corporate except LLP; 2) An officer or employee of the company; 3) A person who is a partner, or who is in the employment, of an officer
or employee of the company; 4) A person, etc. holding any security of or interest in the Company,
etc.; of face value not exceeding One Lac Rupees ; 5) A person, etc. is indebted to the company in excess of Rs. 5 lacs ; or 6) A person, etc. has given a guarantee / security for an amount of Rs. 1
lac;
Eligibility
CS Ranjeet Pandey, Practising Company Secretary
7) a person or a firm who, whether directly or indirectly, has business relationship with the company, etc. of such nature as may be prescribed;
8) A person whose relative is a director or is in the employment of the company as a director or KMP;
9) A person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than such no of Cos as prescribed by ICSI;
10) A person who has been convicted by a court of an offence involving fraud and a period of 10 years has not elapsed from the date of such conviction.
Eligibility
CS Ranjeet Pandey, Practising Company Secretary
Applicability of Section 139 to 144:
The provisions related to rotation of auditors, their remuneration, resignation, disqualifications etc. are not applicable to the Secretarial Auditors.
Can a retainer / consultant to the Company act as its Secretarial Auditor, as Section 144 is not applicable to Secretarial Auditors ??
Will holding both the positions not lead to conflict of Interest between both the duties ??
Retainer as SAs
CS Ranjeet Pandey, Practising Company Secretary
Appointment Process
Offer - Proposal / Tendering Process
Consent Letter - Proposed Limit for Audits
Chapter XII, Rule 8 – Appointment by Board Resolution
Signing of NDA
Mandate Letter / Engagement Letter
CS Ranjeet Pandey, Practising Company Secretary
Draft Consent Letter March …., 2015 The Board of Directors …………………………….. Sub: Consent to act as Secretarial Auditor under Section 204 of the Companies Act, 2013.
Please refer to your offer / Advertisement dated…….., on the subject captioned above, we hereby submit our consent to act as Secretarial Auditor under the provisions of Section 204 of the Companies Act, 2013 read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
In this regard, we hereby state that we are qualified and eligible to be appointed as Secretarial Auditor under the
provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
We further confirm that if appointed, our appointment shall be within the limits prescribed by ICSI for
maximum number of Secretarial Audits. Thanking you. For ………………. & ASSOCIATES COMPANY SECRETARIES (………………………..) PARTNER
CP No. ………….. CS Ranjeet Pandey, Practising Company Secretary
Engagement Letter
Engagement Letter
Scope Date of
Appointment
Periodicity
Fees, etc.
Confidentiality
Termination
CS Ranjeet Pandey, Practising Company Secretary
Identification & Appointment
• Scope
• Frequency
• Timelines
• Resource Person
• Confidentiality
Pre-Audit Preparation
• Document Checklist
• Requisition from other department
• Record update
• Validation
Audit
• Record Room
• Admin Arrangements
• Submit Records
• Response to Inquiry
• Documentation
Post Audit Discussion &
Closure
• Closure of Inquiry
• Taking the issues to other department
• Final Report
• Corrective measures.
CS Ranjeet Pandey, Practising Company Secretary
Audit Principles
Planning
Team Building &
Briefing
Confidentiality
Skill & Competence
Impartiality
Integrity & Independence
Audit Evidence
Consistency
Audit Principles
CS Ranjeet Pandey, Practising Company Secretary
Audit Principles – Planning
CS Ranjeet Pandey, Practising Company Secretary
Finalization of term of Engagement
Nature and Timing of Report or other Communication
Assessment of Policy and Process of Compliance
Identification of significant Audit areas
Matters requiring special attention
Nature and extent of Audit Evidence – its ownership
Involvement of other Auditors / Experts
Allocation of work and co-ordination among staff
Audit Principles - Audit Evidence
CS Ranjeet Pandey, Practising Company Secretary
Information for arriving at conclusion for forming an opinion
Nature – Original, Minutes, Registers, E-data, Confirmation
Sufficiency & Appropriateness – Quality vs. Quantity
Imp. Factors – Degree of Risk, Internal Control, Control Environment, Materiality, nature or extent of Error, etc.
Reporting the Implication of inability to obtain evidence
Sources – Internal, External or third party, Written Reps, etc.
Process – Inspection, Observation, Enquiry, Confirmation.
Audit Techniques
Examination
Enquiry
Confirmation
Sampling
Compliance Test (ICS)
Substantive Checking
Dependence on other Experts
Analytical Review
Audit Techniques
CS Ranjeet Pandey, Practising Company Secretary
Audit Process Appointment & Acceptance
Communication to previous Incumbent, if any
Finalization of Audit Plan & Broad framework
Finalization of Audit Team & Team Briefing
Preliminary Discussions, meetings / Surveys
Examination & verification of Records
Test Checks, Enquiry and confirmation
Substantive Checking, if required
CS Ranjeet Pandey, Practising Company Secretary
Audit Process Analysis of Information
Creating Audit Evidence
Management Representation Letter
Forwarding of audit Summary
Discussion on Observation of Auditors
Submission of Draft Report
Confirmation of Audit Qualifications, if any
Submission of Final Secretarial Audit Report
CS Ranjeet Pandey, Practising Company Secretary
Form and Contents:
Transfer / Transmission Public Inspection of Books Recording of Resolution by circulation Loans other than mentioned in Register Show Cause Notices Entries in registers made in time All information / documents has been provided; Investors Complaints resolved Registrations of premises under Labour and Industrial Laws Employment of Child and bonded Labour Compliance of Social Security Laws
Management Representation Letter
CS Ranjeet Pandey, Practising Company Secretary
Drafting of SAR Pre-drafting requisites: Preparing list of statutory provisions applicable to auditee
Company.
Preparing list of industries specific Laws;
Preparing list of secretarial standards applicable to the auditee company
Preparing list of compliance with SEBI Laws;
Comments on composition and constitution of board of directors, the changes therein – may be given as annexure to the Report.
CS Ranjeet Pandey, Practising Company Secretary
Drafting of SAR
Drafting of SAR should include:
Identifying & reporting good / bad “Corporate Conduct”;
Report “Board Process’ followed and manner of convening and conducting a board meeting should also a part of SAR.
Report / comments on “Compliance Mechanism”.
Comments on “Systems and Processes” of compliance.
Reporting of “Fraud”, if any.
Report aberration and deviations, if any
CS Ranjeet Pandey, Practising Company Secretary
Drafting of SAR Board Process: Adequate composition of Board;
Board Structure – Selection process, succession planning, etc.
Response to information or clarification on agenda by
director;
Deficiency, if any in the Board System and process – Convening, Agenda Circulation, Conducting, minutes recording, etc.
Recording of Dissenting view, if any;
CS Ranjeet Pandey, Practising Company Secretary
Drafting of SAR
Compliance Mechanism: Setting of Compliance scope and fixing responsibility;
Reporting of Compliances to the Board;
Monitoring of significant Litigations by or against the Co.
Adequacy of Internal Control System;
Process of reporting of material event impacting Co’s future;
Existence of whistle blower policy;
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR
SECRETARIAL AUDIT REPORT
For the financial year ended on 31st March, 2015
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No. 9 of the
Companies (Appointment and Remuneration Personnel) Rules, 2014]
To,
The Members,
……………………….Limited
(Address of RO)
We have conducted the Secretarial Audit of the compliance of applicable
statutory provisions and the adherence to good corporate practices by
…………………….Limited (hereinafter called the “Company”). The Secretarial
Audit was conducted in a manner that provided us a reasonable basis for
evaluating the corporate conducts/statutory compliances and expressing our
opinion thereon.
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR
Based on our verification of ………………………Limited’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives, during the conduct of Secretarial Audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2015 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR We have examined the books, papers, minute books, forms and returns filed and other records maintained by …………….Limited (“the Company”) for the financial year ended on 31st March, 2015, according to the provisions of (hereinafter to be referred as “Act” collectively): i. The Companies Act, 2013 and the rules made there under; ii. Foreign Exchange Management Act, 1999 Foreign Trade Policy and
the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; and
iii. Securities and Exchange Board of India Act, 1992, as applicable; iv. Listing Agreement entered into by the Company with BSE and
NSE; and v. The Banking Regulations Act, 1949 and rules made thereunder (the
law, which is applicable specifically to the Company, being Banking Company).
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR
During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. mentioned above subject to the following observations: i. The Company has made disclosure under Securities and Exchange
Board of India (SAST) Regulations, 2011. However, we are unable to comment on the timely disclosure in certain cases, due to absence of adequate supporting proof.
i. The Company has made allotment of equity shares, however
proper stamp duty has not been paid. However, the Company is in the process of moving an application for payment of consolidated stamp duty.
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR We further report that- As informed by the Company, the Board is having the required balance of Rotational, Non-Rotational, Independent and Women Director and the composition of Board will be as per provisions of the Act on or before 31/03/2015 (the time allowed by MCA for compliance of the provisions). There are no changes in the composition of the Board of Directors during the period under review. Adequate notice has been given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. Majority decision is carried through unanimously, and therefore, dissenting members’ views are not required to be captured and recorded as part of the minutes.
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines mentioned above at para 3 (i) to (v) and also laws listed herein below: i. The Factories Act, 1948; ii. The Employment Exchange (Compulsory Notification of
Vacancies) Act, 1959; iii. The Payment of Bonus Act, 1965; iv. The Employee Provident Fund Act, 1952 and scheme made
thereunder; v. The Contract Labour Act, 1970 and the rules; vi. The Apprentices Act, 1961; vii. The TN Labour Welfare Fund Rule, 1973;
CS Ranjeet Pandey, Practising Company Secretary
Sample SAR
We further report that during the audit period there has not been any such activity having a major bearing on the Company’s affairs in pursuance of the above referred laws rules, regulations, guidelines etc.
Place: New Delhi Date: __________2015
For Ranjeet Pandey & Associates
Company Secretaries
CS Ranjeet Pandey
Partner FCS- 5922, CP No.- 6087
CS Ranjeet Pandey, Practising Company Secretary
Recommended