The statutory auditors of Diplomat Ltd. reported a fraud committed by the employees of the Company involving an amount of ₹25 lakh. Further, the secretarial auditor of the Company made a remark about non-filing of satisf

Section 143(12) read with Rule 13(3) of the Companies (Audits and Auditor) Rules, 2014 provides that in case of a fraud involving lesser than Rupees One Crore, the auditor shall report the matter to Audit Committee constituted under section 177 of the Companies Act, 2013 or to the Board immediately but not later than two days of his knowledge of the fraud and he shall report the matter specifying the following: Nature of Fraud with description; Approximate amount involved; and Parties involved. In respect of the fraud reported by the auditors, the Board's report should make following disclosure: Nature of fraud with description; Approximate amount involved; Parties involved, if remedial action not taken; and Remedial action taken. In respect of the remark by Secretarial Auditor about non-filing of satisfaction of charges with ROC, Section 204 (3) of the Companies Act, 2013 provides that the Board of Directors, in their report made in terms of sub-section (3) of Section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1). Accordingly, the Board's report should state detailed explanation for the remark, together with reasons for such lapse, and the reasons that led to the lapse.