Excellent & Co., Company Secretaries were the Secretarial Auditors of Opoco Ltd. During the secretarial audit, the Secretarial Auditor was verifying the board approvals and other documentation for the loan taken by t

Section 143 of the Companies Act, 2013 (the Act) confers certain powers on the auditors including Secretarial Auditors as well as the Cost Auditors of the company and it casts certain duties as well on them. Section 143 (12) of the Act carries a non-obstante clause casting a duty on the auditors of the company including Secretarial Auditor to report to the central government an offence of fraud committed by the company or by its officers or employees. Rule 13 of the Companies (Audit and Auditors) Rules, 2014 contains the operational procedures for reporting of fraud as mandated in Section 143(12) of the Act. Similar obligations are cast upon the company secretary in practice (secretarial auditor) and the cost accountant in practice (cost auditor) also. Accordingly, the following are the obligations and duties of the Secretarial Auditors in the given case under Companies Act, 2013 as provided under rule 13 of the Companies (Audit and Auditors) Rules, 2014. If an auditor of a company, in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of rupees one crore or above, is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Central Government as under: the auditor shall report the matter to the Board of Directors or the Audit Committee, as the case may be, immediately but not later than two days of his knowledge of the fraud, seeking their reply or observations within forty-five days. on receipt of such reply or observations, the auditor shall forward his report and the reply or observations of the Board of Directors or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days from the date of receipt of such reply or observations; in case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of forty-five days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations; the report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed Post followed by an e-mail in confirmation of the same; the report shall be in the form of a statement as specified in Form ADT-4; as per Sec 143(15), any non-compliance of this duty by any auditor, cost accountant, or company secretary in practice, attracts penalty, which shall be (a) in case of a listed company five lakh rupees; and (b) in case of any other company one lakh rupees.