Exon India Limited, a subsidiary of a Foreign Multinational Company, was embroiled in one of the most high-profile corporate governance scandals. The company was accused of financial irregularities, including manipulatio

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 practices. 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 provides a basis for evaluating 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 in Whole Time Practice, 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. Need for Secretarial Audit: 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 designed on the principle of "Prevention is better than cure" rather than post mortem exercise and to find faults. It has effective mechanism to ensure that the legal and procedural requirements are duly complied with. It 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. It strengthens 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. Secretarial Audit helps the investor in analyzing the compliance level of companies and thus evaluate the quality of its governance/decision making process, thereby increases the reputation.