Benefits of Secretarial Audit

Secretarial Audit plays an important role as it is a part of the compliance management in an organisation. It is an effective tool for companies in order to improve their operations. It helps in completing the objectives and achieving the goals of an organisation, as a whole.


Section 204(1) of the Companies Act of 2013 mandates secretarial audits of all listed entities and companies in other defined classes. Such organisations are expected to provide a secretarial audit report with their Board of Directors' report.

Benefits of Secretarial Audit

The following are the benefits of secretarial audit:

  1. Effective mechanism- It ensures an effective mechanism if compliance is made with the procedural and legal requirements of the company. Procedural requirements are the adopted resolutions on the matters of procedures and practices to be followed. Legal requirements are the formalities to be complied with, for example, tax regulations, financial obligations, employment regulations, etc.
  2. Effective governance- It ensures effective governance in the working of the company by safeguarding its position and minimizing the possibility of penalties and losses. 
  3. Risk management- It acts as a risk management tool in the functioning of the company. It covers and prepares for informed risks taken in order to grow and expand the business.
  4. Undivided attention - Proper compliance with secretarial audit allows the directors to fully focus on the crucial business dealings of the company. This ensures the directors that they can function efficiently on a secure and sound foundation. 
  5. Boosts confidence - Proper compliance with secretarial audits also boosts the level of confidence of the directors and managerial personnel so they can make decisions and invest themselves in the workings of the company.   
  6. Strengthen goodwill - It enables to strengthen the goodwill of the company in the eyes of their stakeholders and regulators. It also promotes the name of the company and helps the investors analyse the level of compliance which further results in building up their repute in society.
  7. Self-regulation- It administers self-regulation and promotes professional discipline in the working of the company environment. It helps to raise the bar and set standards for all the employees.
  8. Non-compliance- It helps to detect any non-compliance with the applicable laws, rules, and regulations and facilitates taking corrective measures to avoid future risks and losses. It also detects non-compliance with the policies and guidelines of the company and whether they concurrently comply with the laws, rules, and regulations.
  9. Satisfied regulators - This reduces work pressure of the regulators and assures them that they are not likely to be exposed to liabilities of any kind by effective and timely compliance checked by secretarial audit.
  10. Attracting future investors- It helps to showcase the records and data proving legality and validity which attracts new investors for the company which further co-relates to the expansion of the business. It also leads current investors to the right path by being crystal clear and assuring that their funds are in good hands. 

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