Secretarial Audit is a process to check compliance with the provisions of various laws and rules/ regulations/ procedures, maintenance of books, records etc., by an independent professional to ensure that the company has complied with the legal and procedural requirements and also followed the due process. It is essentially a mechanism to monitor compliance with the requirements of stated laws

Further, Regulation 24A of the SEBI (LODR) Regulations, 2015, every listed entity and its material unlisted subsidiaries incorporated in India is required to undertake secretarial audit and shall annex with its annual report, a secretarial audit report, given by a company secretary in practice, in From No. MR-3 from the year ended March 31, 2019.

The secretarial auditors should detect the instances of non-compliances and in result facilitate taking correctivemeasures. The professional should perform an effective due diligence exercise before the issuance of Secretarial Audit Report.

Secretarial Audit

The term “Secretarial Audit” is a mechanism which is connected with the audit of the non-financial aspects of the company. It gives necessary comfort to the management, regulators and the stakeholders, as to the compliance by the company of applicable laws and the existence of proper and adequate systems and processes in the company.

Every Company, while pursuing its business activities, has to comply with the rules and regulations relating to the Companies Act, Securities laws, FEMA, Industry Specific laws and General laws like Labour laws, Competition law and Environmental and Pollution related laws and should also pursue the good governance practice Secretarial Audit covers non-financial aspects of the business impact on the performance of the company and verifies compliances of applicable laws, regulations and guidelines. Nonetheless, this exercise will enhance the capabilities of the management and also mitigates business & reputation risk to a great extent. It also evaluates the manner in which the affairs of a company are conducted to a great extent.

The Secretarial Audit postulates for an independent verification of the records, books, papers and documents by a Company Secretary to check the compliance status of the company according to the provisions of various statutes, laws and rules & regulations and also to ensure the compliance of legal and procedural requirements and processes followed by the company.


Secretarial Audit is accordingly an independent and objective assurance activity intended to add value and improve operations of a company. It helps to accomplish the organization’s objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes


Secretarial Audit is the process of independent verification, examination of level of compliance of applicable Corporate Laws to a company. The audit process if properly devised ensures timely compliance and eliminates any un-intended non-compliance of various applicable rules and regulations. An action plan of the corporate secretarial department is to be designed so as to ensure that all event based and time based compliances are considered and acted upon. Secretarial audit is to be on the principle of “Prevention is better than cure” rather than post mortem exercise and to find faults. Broadly, the need for Secretarial Audit is:

  • Effective mechanism to ensure that the legal and procedural requirements are duly complied with.
  • Provides a level of confidence to the directors & key managerial personnel etc.
  • Directors can concentrate on important business matters as secretarial audit ensures legal and procedural requirements.
  • Strengthen the image and goodwill of a company in the minds of regulators and stakeholders.
  • Secretarial Audit is an effective governance and compliance risk management tool.
  • It helps the investor in analyzing the compliance level of companies, thereby increases the reputation.


A Company Secretary in practice is a professional who is well-versed in matters of statutory, procedural and practical aspects of laws applicable to companies, both listed and unlisted public and private companies. A strong knowledge base makes him a competent professional to conduct Secretarial Audit. In terms of section 204(1), only a member of the Institute of Company Secretaries of India holding certificate of practice (company secretary in practice) can conduct Secretarial Audit and furnish the Secretarial Audit Report to the company.

Students are advised to refer the updated Guidance Note on Secretarial Audit, Guidance note on the Annual Secretarial Compliance Report for the detailed checklist on the other aspects relating to Secretarial Audit which is not covered in this study material.

Format of Secretarial Audit Report

Every Secretarial Audit Report is to be submitted in a format prescribed under sub-rule (2) of rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the format of the Secretarial Audit Report shall be in Form No. MR-3 which shall be issued by a Company Secretary in Practice.

FAQs on limits of Secretarial Audit

1. What is the limit for the issue of Secretarial Audit Reports for financial year 2016-17?

The Council of the Institute at its 235th meeting held on February 11, 2016 reviewed the existing limits for the issue of Secretarial Audit Reports and decided as below:

  • 10 Secretarial Audits per partner/ PCS, and
  • an additional limit of 5 secretarial audits per partner/PCS in case the unit is peer reviewed.

These limits will be applicable for the Secretarial Audit Reports to be issued for the financial year 2016-17 onwards.

2. To whom is the peer reviewed certificate is granted – Individual or Practicing Unit?

The peer review certificate is issued to the Peer Reviewed Practice Unit. Practice unit means, “members in practice, whether practicing individually or as a firm of Company Secretaries.” Accordingly, peer review certificate may be granted to an individual or to a firm, as the case may be.

3. What is the date on which Peer Reviewed Unit (PRU) can say, I am Peer Reviewed?

A Practice Unit (PU) is said to have been peer reviewed from the date of issue of peer review certificate by the Peer Review Board of the Institute. Accordingly, PRU can take up additional 5 Secretarial Audits on the basis of being peer reviewed, only from date of issue of the certificate.

4. What is the period for which Practice Unit is certified as PRU?

In terms of para 13 of the Guidelines for Peer Review of Attestation Services by Practicing Company Secretaries (Peer Review Guidelines), the peer review of every practice unit should be mandatorily carried out at least once in a block of five years.

Accordingly, for the purposes of taking up additional five secretarial audits, the validity of peer review certificate should be five years from the date of issue of certificate.

5. How can it be identified whether a practicing unit is peer reviewed?

The list of peer reviewed practice units is available on the ICSI website at the link:

6. To whom is the issue of 5 additional secretarial audit reports allowed: individual partners or the practice unit as a whole (on the basis of certification of peer reviewed firm)?

The limit of 5 additional secretarial audits of Peer Reviewed Unit is to be considered as 5 secretarial audits for each individual partner, subject to overall limit of 15 secretarial audits per individual.

7A. If a person is a partner in two firms out of which one is not peer reviewed and another is peer reviewed, what should be the limit?

The limit per individual is 10 secretarial audits in each year. He may carry out 5 additional secretarial audits in respect of the firm which is peer reviewed.

7B. If the partner of peer reviewed firm is also practicing in individual capacity/ partner of another firm then whether eligibility of 5 additional Secretarial Audits can be used as a partner of peer reviewed firm or in individual capacity/partner of firm?

The additional limit of 5 secretarial audits can be used in the capacity of partner of peer reviewed firm only.

7C. Whether the answer to the above will be different if the individual is partner of another firm which is also peer reviewed?

Since, the overall limit for each individual/ partner is 15 Secretarial Audits (10 +5). The individual can utilise the additional 5 audits in the capacity of partner of any of the peer reviewed firm.

8. Can this additional limit of 5 secretarial audits be transferred from one peer reviewed firm to another firm on the basis of common partners?


9. If new partner joins a peer reviewed firm, then whether such partner be allowed for such 5 additional audits?


10. In case the firm/ individual has applied for peer review, then whether he will be eligible for additional 5 Secretarial Audits.

No, the benefit of additional 5 secretarial audits will accrue to a firm/individual only after issue of peer review certificate by the Peer Review Board.

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