GKL & Co., a firm of Practicing Company Secretaries, is the Secretarial Auditor of ABC Limited. During examination of documents, the auditor had observed a fraud of ₹ 2 crore, which was not reflected in the Statutory

The obligation and the duties of the secretarial auditor are mentioned under section 143(12) of Companies Act, 2013 and Rule 13 of the Companies (Audit and Auditors) Rules, 2014. If any auditor of the company in the course of performance of his duties as an auditor has a reason to believe that any offence of fraud which involves or is expected to involve an amount of Rupees I Crore or above is being committed or has already been committed against the company by its officer or employees, then the auditor shall report the matter to the Central Government. Auditor should report such funds as soon as possible but not later than 60 days of his knowledge about the frauds in the following manner: The auditor shall report the matter to Board of Directors or the Audit Committee as the case may be, immediately but not later than 2 days of his knowledge of the fraud seeking their reply or observations with in a span of 45 days. On receipt of such reply for the observation the auditor shall forward his report along with the reply given by the Board of Directors or the Audit Committee as the case maybe to the Central Government within 15 days from date of receipt of such reply from the board oblique audit committee. In case the auditor fails to get any reply from the Board or Audit Committee within span of 45 days, then he shall forward his report to the Central Government with remark that he has not received any report or reply from the Board of Directors. The said report has to be filed in the form ADT-4 and shall be sent to the Secretary Ministry of Corporate Affairs. According to Section 143 (14) of the Companies Act, 2013, the above provision are applicable to the company secretary in practice conducting secretarial audit under section 204. In the instant case, the fraud is more than Rupees 1 Crore, therefore, it is also the responsibility of the secretarial auditor to report the fraud and the statement or argument given by the secretarial auditor that this is the responsibility only of the statutory auditor is not tenable.