SACMDD Revision Book June, Dec23 CS Muskan Gupta Yes Academy

CS PROFESSIONAL For Dec 23/June 24 Attempt
Module-II
REVISION
BOOK
SECRETARIAL AUDIT
COMPLIANCE MANAGEMENT &
DUE DILIGENCE
CS Muskan Gupta
HIGHLIGHTS
- Amended in line with new modules issued by ICSI
- Covers all important topics
- Covers past topics of previous year exams
CHAPTER 1
COMPLIANCE
FRAMEWORK
COMPLIANCE FRAMEWORK
Company has to comply with a lot of laws rules and

regulations and in order to avoid non compliance or
risk associated to that non compliance, compliance
management system is framed by company
secretary.
CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

CORPORATE COMPLIANCE FRAMEWORK
Compliance Chart: Mentions

applicable Laws relating a Compliance Advisory: Mentions Compliance Scorecard: A tool to
business’ operation. And explains advice on compliances of applicable analyze the position of an
how compliance risk mitigation laws and effect of non-compliances. organisation in compliance.
activities are embedded in
business processes.

FUNCTIONS OF A WELL DESIGNED COMPLIANCE FRAMEWORK
RATNA AA Compliance policy and

GAYA TOH procedures: Policies and Access to rules and regulations:
DIRET PASS procedures for implementation Always stays in sync with
of compliance management changing rules and regulations
system can be designed and as soon as there are changes
Compliance Dashboard: properly and in conformity with in law.
updated laws.
Compliance dashboard is
used to see a company’s
performance with respect
to compliance. A well- Compliance audit: An Compliance Training: A
designed compliance audit is conducted to well-designed system
framework will provide a make sure that company
has to provide
compliance dashboard for is in compliance with
applicable rules and employee training to
all users to track the
regulations mitigate risks.
compliance events of the
company.
PREPARATION OF COMPLIANCE CHART
Compliance Chart is an overview of Laws/Rules/Regulations and

Risk Litigation activities embedded in organizations. The compliance
chart is prepared by considering the following activities:
a) Identification of compliances under applicable Laws, Rules and
….Regulations
b) Risk Assessment
c) Risk Mitigation
d) Compliance Monitoring
e) Compliance Reporting

ROLE OF COMPANY SECRETARY IN CREATION OF
COMPLIANCE CHART
 Risk Assessment: In the

risk assessment process,  Compliance Risk
 Identification of Mitigation:
the company identifies the
applicable rules and laws: Compliance risk
inherent risk of each
The legal team of the mitigation is the
obligation as critical, high,
company guides the process of developing
medium or low and on the
functional heads in and implementing
basis of the outcomes a
identification of the laws controls such as
risk mitigation strategy is
applicable to the company policies, procedures
prepared. There are two
and to identify the and guidelines to
types of risk assessments
compliances that are prevent or minimise
that can be performed by
required under each law, risks arising from
the company, these risk
rules and regulations compliance obligations.
assessments are known as
applicable on the company.
high level risk assessment
and detailed risk
assessments.

Legal Cell:
• Identification of new and
Top Management: changed relevant local
● Understanding the compliance laws, regulations and
Compliance obligations and recent changes standards
Monitoring- ● Approval of policy and procedures • Communication in Writing
● Motivating employees to doing to compliance owner/
ownership/allocation executor
compliance in time
: It is necessary to • Review of system and
describe primary and policies and Procedures
secondary ownership • Resolution of Doubts and
of compliance Clarity in Directions
obligations, where, the • Periodical Review and
primary owner is Assessment
mainly responsible for
the compliance and
the secondary owner Senior Management & Functional
has to supervise the Heads:
● Analysis and research on the
compliance.
Regulatory changes
The role of the various ● Formation of Policy and procedure
Compliance Officer /
level of management Subordinate Staff: ● Motivating Compliance officer to
for compliance ● Performing Compliance Timely Compliance
ownership can is Obligations ● Guiding compliance officer in doing
illustrated as under: ● Updating Compliance compliance
obligations into the Compliance ● Tracking the Compliance chart
Chart ● Risk Escalation
● Risk Identification and ● Conflict Resolution
intimation
CS MUSKAN GUPTA 9532064262 ● Conflict intimation. YES ACADEMY, PUNE 8888 235 235
Compliance Reporting
Functional Heads will

Collect information Submit report to CS
Prepare a report Submit report to MD
from respective (add comment)
department
AFFIRMATION
Content of
Compliance
Report is
have been done
correct
Submit to BOD
(along with the
comment)

Risk Assessment: Done to identify gaps between company’s current practices and
regulatory requirement.
Program Design/Update: Used to assess the compliance programme and the reporting
structure or communication methods.
Communication, Training, and Implementation: Involves communication of policies

and procedures, philosophy behind the same and training programme’s on such policies.
Compliance Policies and Procedures: Policies and procedure should be enhanced and updated.
Risk – Review
and update
Ongoing self-Assessment, Monitoring, and Reporting: Assessment, mechanisms,
and processes must be incorporated to achieve success.

TRAINING AND IMPLEMENTATION
A strong Compliance training and education

programme reinforces Company compliance An annual plan for Compliance Risk related
culture and builds awareness and training and education must be developed and
understanding updated and must include-:
of -: 1. Statements that provide relevant internal
1. Company Framework and external compliance obligations and the
risks arising from those obligations;
2. Roles and responsibilities outlined in the
policies and Framework 2. The business processes to which the
compliance obligations are linked or on which
3. Critical and high compliance obligations they have an impact
identified in the Compliance Chart
3. Brief description of the training or education
4. The process for addressing compliance activity;
issues
4. Target audience (new employees or existing
5. Consequences of failing to meet employees)
compliance obligations.
5. Frequency of training

SIGNIFICANCE OF CORPORATE COMPLIANCE MANAGEMENT
A compliance management programme has following significance:

1. Companies with effective compliance management programme
are more likely to avoid penalties.
2. It creates safety valve against non-compliances which were
unintended.
3. Ensures cost savings by avoiding penalties/fines and minimizing
litigation.
4. Creates better brand image of the company in the market.
5. Enhances credibility/creditworthiness that only a law-abiding
company can have.
6. Creates goodwill among the shareholders, investors, and
stakeholders.
7. Gives recognition as Good corporate citizen.

APPARENT ADEQUATE AND ABSOLUTE COMPLIANCES
Apparent Compliances- Apparent Compliances

are superficial compliances which seems to be true
but are not.
Adequate Compliances- is compliance in letters.

The aspects specified in law are complied in letters,
without getting into the spirit of the law.
Absolute Compliances- are those which are in

line with the spirit and intent of the law.

SECRETARIAL AUDIT AND COMPLIANCE
MANAGEMENT SYSTEM
A. Nature of business B. Geographical domain of C. Jurisdictions in which it

(es) its area of operation(s). operates .
The compliance
system and
processes in a
company are E. Whether the
D. Nature of the company viz., private, public,
dependent company is a listed
government company, etc.
mainly on the company or not
following
factors:
F. Size of the company both in terms of operations as well as investments,

technology, multiplicity of business activities and manpower employed.

ROLE OF COMPANY SECRETARIES IN COMPLIANCE
MANAGEMENT
‘Compliance Manager’ of the

company, who ensures that Is the professional who guides the board
the company is in compliance and the company in all matters.
with all regulatory provisions.
Has to ensure that Play a proactive advisory role as he

disclosures are made to advises management, Boards and
stakeholders in true letter committees, and the employees.
and spirit.
Provide advice on compliance risk,

Provide advice on compliance risk,
responsibilities, obligations, responsibilities, obligations
concerns
Is the professional who guides the board and the company in all
matters, renders advice in terms of compliance and ensures that
the board procedures are duly followed.
RISK PROFILING OF A COMPANY MAY INCLUDE FOLLOWING
RISK
Business Risk Management

Business Continuity
(i) Whether risk management
Business Ethics Framework Whether Disaster Recovery
policy and procedures are in
place? Whether whistle-blower policy Plan, Business continuity
(ii) Whether formal risk and Code of conduct exists plan and crisis management
assessment has been carried out and implemented? policy defined and
or not? implemented?
Internal Audit and Financial Succession

Integrity Fraud Risk Management Planning
(i) Whether internal audit function is (i) Whether Fraud Risk Management policy Whether formal
independently reporting to Audit exists, detailing structure of fraud deterrence, process of
Committee? prevention and investigation, fraud incidence succession
(ii) Whether roles and responsibilities response guidelines. (ii) Whether Key controls to planning defined
of senior management is defined and mitigate fraud risks are identified and
documented?
and implemented?
monitored for compliance on regular basis.
(iii) Whether adequate segregation of
duties exists?
Legal Compliance Framework Management Operational Review

Whether legal compliance framework is Whether formal process management oversight and
documented and compliance health to review mechanism exist and followed.
checked on periodic basis?
CHAPTER 3
DOCUMENTATION
AND
MAINTENANCE
OF RECORDS
PURPOSE OF DOCUMENTATION ELECTRONIC REPOSITORY OF DOCUMENTS
Used to store electronic documents, records,

• Client service images of paper-based documents captured
• Communication through scanner.
• Accountability Advantages:
1. Tracking of check-in or check-out by various
• Professional Responsibility
officers
• Legal Requirement
2. Locking and unlocking of Document
• Quality
3. Simultaneous editing
• Research 4. Document Version Control
• Resource Management 5. Ease in Audit trail
6. Annotation
ADVANTAGES OF ELECTRONIC RECORDS DISADVANTAGES OF ELECTRONIC

a. Cost Effective RECORDS
b. Ease of Use a. Software risk
c. Labour Savings b. Format risk
d. Search Ability c. Media Compatibility
e. Portability d. Reliability
e. Portability
f. Version tracking f. Conversion Expense

MAINTENANCE AND INSPECTION OF
SECURITY OF RECORDS MAINTAINED
DOCUMENTS IN ELECTRONIC FORM
IN ELECTRONIC FORM- RULE 28
UNDER COMPANIES ACT, 2013
Section 120 of the Companies Act, 2013 read with

Rule 27 & 28 of Companies (Management and
Administration) Rule, 2014 provides for  Provide adequate protection against
maintenance of documents in electronic form and unauthorized access, alteration or
inspection of documents maintained in electronic tampering of records;
form.  Ensure against loss of the records as a
result of damage to, or failure of the
media on which the records are
Section 20 of the Companies Act, 2013 states that maintained;
any document, record, register, minutes, etc. that  Ensure that the signatory of electronic
are required to be kept by a company or allowed to records does not repudiate the signed
be inspected or copies to be given to any person by record as not genuine;
a company under the Act, may be kept or inspected  Ensure that computer systems, software
or copies given, as the case may be, in electronic and hardware are adequately secured and
form. validated to ensure their accuracy,
reliability and consistent intended
performance;
The rule 27 provides that every listed company or a  Ensure that the records are at all times
company having not less than one thousand capable of being retrieved to a readable
shareholders, debenture holders and other security and printable form;
holders, may maintain its records in electronic
form.
PHYSICAL
REPOSIT Physical repository means a place where data is stored and maintained.
ORY
SNO. Particulars Physical Data Room Virtual Data Room

1. Form of documents Papers, files Electronic or soft copies of
documents- video or audio
documents
2. Time required for creation of Longer time required Can be created within 48 hours
data room of demand of prospective
buyer.
3. Cost Cost is high Cost is low
4. Convenience Searching of documents Multiple buyers can review the

consumes a lot of time documents at the same time
5. Accessibility to data room Timings to access data may be Can be accessed anytime
restricted
6. Facility to restrict access of Difficult to implement any Access can be restricted.

specific document restriction

Operating logs: Names of the individuals who have worked on the same
Documents.
Results of reviews: Record of changes made in the agreement
SAFETY AND RETRIVAL Inspections: List of individuals who have access of the records and have right to
RECORDS inspect the same.
Monitoring of work performance: Monitoring of work performed by the

individual to whom the file is shared.
Information analyses: Making information system of the organization and

tracking of files easy.
The care of
records is
Keeping Ensure life Record
governed by
together cycle Preservation
three main
concepts

PRESERVATION OF RECORDS
 Regulation 9-Listed entity shall have a policy

for preservation of documents, approved by its
board of directors, classifying them in at least
two categories:
 Section 163 of the Companies Act,
(a) Documents permanent in nature;
a. Register of members are to be preserved permanently.
(b) documents of not less than eight years after
completion of the relevant b. Index of members are to be preserved permanently.
transactions
c. Register of debenture holders are to be preserved for 15
years after the redemption of debentures.
d. Index of debenture holders are to be preserved for 15

years after the redemption of debentures.
 Regulation 30(8) provides that the listed entity e. Copies of all annual returns and copies of all
shall disclose on its website all such events or certificates and documents required to be preserved for
information which has been disclosed to stock 8 years from the date of filing with the Registrar.
exchange for a minimum period of five years

Following factors have to be considered in the preparation of the preservation
and archival policy of the company:
A. Analysis and Restructuring Existing

Systems C. Providing Physical Protection for
● reviewing and revising legislation and Records
policies ● Identifying and protecting vital records
● reviewing and revising organizational ● implementing and maintaining preservation
policies and structures measures
● determining resource requirements, such ● developing emergency plans to protect
as facilities and staffing …records
● developing strategic and business plans B. Organizing and
Controlling Records
● managing the creation,
maintenance, and use of
files
● building proper record
…keeping system
D. Managing Records in Records Centre E. Managing Archives
● developing and maintaining records centre ● acquiring and receiving archives
facilities ● arranging and describing archives
● transferring, storing, and retrieving records …according to archival principles
according to disposal schedules
● disposing of records as indicated by the ● providing public access to the archives
…schedules

The record room should be kept separate from other administrative units and should be large
SETTING
enough to store the relevant files.
UP OF A
RECORD
Following factors should be considered:1. Humidity 2. Temperature 3. Light
ROOM
Physical data needs to be protected and handled responsibly, especially if the data contains PRIVACY
personal or confidential information.
OF
The following documents are primarily considered as confidential and need complete privacy: RECORD
a. Customer’s & Employees’ Information: AND ITS
b. Office Plans, Office IDs and Internal Procedure Manuals CONTROL
c. Contracts and Commercial Documents and Trade Secretes
a. All confidential documents should be stored in locked file cabinets or rooms accessible only to
those who are authorized.
SUGGESTIVE b. All electronic confidential information should be protected through encryption and passwords.
STEPS FOR
PROTECTING c. Employees should refrain from leaving confidential information visible on their computer
CONFIDENTIAL monitors when they leave their office.
INFORMATION
d. Employees should not discuss confidential information in public places.
e. Employees should avoid using e-mail to transfer certain sensitive or controversial information.
CHAPTER 4
SEARCH AND
REPORT

SEARCH AND STATUS REPORT
SCOPE AND IMPORTANCE
1. By Banks: to know the history of the company before

advancing any loans or credits.
2. By Directors: Any person can ask for a search status report
The following basic information is given
who may be appointed as director of the company for following
● The date of loan taken by the company and the charge created
reasons:
in
● To know the present directors of the company.
such respect.
● To know the assets and liabilities of the
● The name and address of the charge holders.
company.
● The type of charge i.e. whether joint charge or consortium
● To know the complete history as per ROC
charge.
records since incorporation.
● The amount of loan.
● The property charged or pledged against such loan.
● The terms and conditions of such loan
3. By Shareholders: Shareholders can demand

5. Customers and Suppliers: Before the Search Report of the company for the
entering into any agreement/ contract 4. Government Authorities: following reasons:
with the company, the suppliers or the Government Authorities like Income Tax ● To know the status of the company.
Customers get the Search Report Authorities, RBI, SEBI etc. can also get ● To know the status of their shares held in the
prepared. the Search Report prepared to company
understand the present status of the ● To know the Directors of the company.
company. ● To know the complete history as per ROC
records since incorporation

SEARCH OF CHARGES REGISTERED UNDER COMPANIES ACT, 2013
Creation of charge
State reasons for not Take order from CG

within 30 days
registering charge ( INC 28)
ROC in FORM CHG - 1
If not registered within

30 days - Total 60 File application to
days (i.e. additional 30 Give the order to ROC
Central Government
days) with additional
fees
Failure to file
application within the In 120 days if a person
60 days - 60 days fails to register the ROC will register the
extension (Condition - application , ROC will Charge
Ad Valorem fees) not register the Charge
TOTAL 120 Days

SEARCH REPORT UNDER THE COMPANIES ACT, 2013
1. Examination of documents Registered on MCA 21 3. Cross Verification of Documents from the MCA Records:
portal: SR.NO PARTICULARS DOCUMENTS TO BE
 MCA provides the facility to access public documents of the VERIFIED
company. 1. Name of the Company Memorandum of Association
 The document can be viewed only within 7 days after the Certificate of Incorporation or
payment has been confirmed Fresh Certificate of
 The documents are available for only 3 hours after the user Incorporation/Change of Name.
has started viewing the first document of the company.
2. Date of incorporation Certificate of Incorporation
2. Inspection of Various Documents maintained by the
3. Company Certificate of
company: Number/Corporate Identity Incorporation/Fresh Certificate
1. Various clauses of Memorandum and Articles of Association Number upon change of name/
2. Forms filed with the Registrar of Companies Certificate of registration of
3. All statutory registers *CLB Order for shifting
4. Verification of financial statement and Auditor’s Report registered office to another
State
5. Report of Internal Auditor
6. Copies of contracts made between the company and any of 4. Address of Registered Office INC-22, MGT-14 Resolution(s)
the related parties of Board/ General Body, INC28
with copy of NCLT Order.
7. Transfer and Transmission of Share
8. Instruments creating, modifying or satisfying charges
5. Name and address of Articles of Association, DIR-12,
9. Various Disclosures from Directors
present directors Register of Directors.
10. Related Party Transactions
11. Corporate Social Responsibility (CSR) 4. Compilation and Preparation of Search Report
12. Directors and Key Managerial Personnel (KMP)
5. Format of Search Report and its Preparation
SEARCH REPORT UNDER IPR LAWS
Procedure for Search Report under IPR Laws is as following:

1. Preparing checklist 4. Verifying facts and confirm that the
2. Segregating the IP assets relevant for the information is correct
transaction from irrelevant ones 5. Analysing protected and protectable IP
3. Analysing all documents carefully rights
6. Drafting of search and status report
PROPERTY TITLE SEARCH SEARCH REPORT UNDER SEBI, RBI, STOCK

EXCHANGES
Conducted to collect the information about the history of
a property right from the original owner of the property to
the current owner over a period of time.
It includes: 7. Mortgage 1.The professional will prepare a checklist
1. Ownership 8. Tax Payment 2.He will analyse the nature of documents
2. Deed Copy 9. Bankruptcy Search 3.Verify facts and confirm that the information is correct.
3. Legal Description 10. Municipal Service Lien 4.The final report should contain all observations in
4. Chain documents relation to transaction undertaken by the company
11. Plot Map
5. Possession 12. Property Zoning
6. Leases 13. Civil Court Record
KEY DOCUMENTS TO BE ANALYSED WHILE PREPARING THE SEARCH AND STATUS REPORT
ON INFORMATION/ DOCUMENTS AVAILABLE ON NSE AND BSE WEBSITE:
1. Corporate Announcements
11. Information Memorandum-
2. Corporate Actions
1. QIP
3. Financial Results
2. Scheme of Arrangement
4. Board Meetings 3. Companies listed under Direct Listing
5. Shareholders Meetings 4. Revocation
6. Voting Results
12. Pledge Data
7. Results Calendar
13. Sustainability Reports
8. Shareholding Patterns
14. Buyback / Redemption
9. Corporate Governance
15. Public Notice - Compulsory Delisting
10. Offer Documents

CHAPTER 5
KNOW YOUR
CUSTOMER

Meaning of Customer under KYC KYC REQUIREMENT IN VARIOUS
TRANSACTION
 A person or entity that maintains an account

and/or has a business relationship with the bank.
 Director who has been allotted DIN issued by the
1. Incorporation of Company
Ministry of Corporate Affairs
2. Obtaining DIN
 Beneficiaries of transactions conducted by
3. Opening of Bank Account / D-mat Account
professional intermediaries such as stockbrokers,
4. Deposit /Withdrawal of Cash
Chartered Accountants, Company Secretaries or
5. Purchase of Gold/ Silver/Property
solicitors, as permitted under the law.
6. Employment, Provident Fund etc.
 One on whose behalf the account is maintained
7. Opening a subsequent account where
(i.e. the beneficial owner).
documents have not been submitted as per
 Any person or entity connected with a financial
current KYC, while opening the initial
transaction which can pose significant
account
reputational or other risks to the bank.
8. Opening a Locker Facility
9. When the bank feels it necessary to obtain
additional information from existing
OBJECTIVES OF KYC
customers based on conduct of the account
10. When there are changes to signatories,
mandate holders, beneficial owners etc.
To stop the corporate vehicles from being used for
illegal purposes such as money laundering
activities, Fraud, bribery and corruption.

 TYPES OF KYC
C-KYC:
E-KYC: KYC OF DIRECTORS BY ICSI GUIDELINES ON
MCA: KNOW YOUR MEMBERS:
 The government has  E-KYC customers authorize
UIDAI to reveal their identity  Conducted by the MCA at  KYM proforma is to be
authorized the Central
or address information the time of the Allotment submitted by all the
Registry of Securitization
through biometric of the Director members of the
Asset Reconstruction and
authentication to their Identification Number. Institute along with the
Security Interest of India
respective bank branches or payment of annual
(CERSAI) for performing
business correspondent  Every individual who has membership once in
the functions of Central
after which the UIDAI sends been allotted a DIN before three years. and has to
KYC Records Registry
the customers data 31st March of a financial be submitted every time
(CKYCR).
consisting of customer year need to submit e- when there is a change
name, age, gender, and form DIR-3-KYC to the CG in job/
 After complying with the
new CKYC norms, a photograph electronically to on or before 30th profession/professional
the bank. September of immediate address.
unified customer
next financial year.
identification code is
 The fee will be accepted
generated which can be
only when the proforma
used whenever KYC is
is properly filled and
required.
signed.
 Helps the institute to

maintain updated
information about the
members and prevent
identity theft.

KNOW YOUR CLIENT (KYC) NORMS FOR COMPANY SECRETARY IN PRACTICE ICSI
Key Elements:
1. Client Information
2. Corporate Structure
3. Permissible Business information as per Client Acceptance Policy
Memorandum of Association
4. Board Structure/ Organization Structure
5. Transaction with Business entities in which
Directors are interested
6. Creation, modification and satisfaction of Client Identification Procedures
charges
7. FOREX Exposure and overseas borrowings
8. Payment status of statutory dues and arrears
9. Name of the CEO, Company Secretary & CFO
10. Engagement Information Client Monitoring Mechanism
11. Proceedings against the company or any of its
director
12. Other Information
13. Undertaking from the client that information
provided is true and correct to his
knowledge and belief. Risk management

RISKS UPON DUE KYC
THE RISK THAT ARISES LEGALLY:

REPUTATIONAL RISK:
If any client is involved in any illegal activity it will be
Advisable to maintain proper KYC to protect reputation from
subjected to adjudication and penalties and if no KYC is
any instances with respect to fraud and to attract customers.
conducted.
OPERATIONAL RISK: FINANCIAL RISK:

Risk of loss which may occur due to failure in internal If any professional without complying with KYC Norms,
process, poor documentation, litigation, disputes and due provides its services then it will be hard to recover the money
diligence. and they may suffer a financial loss.
ENHANCED DUE DILIGENCE (EDD) IN KYC CUSTOMER DUE DILIGENCE IN KYC
 Enhanced Due Diligence is a rigorous process

 Customer Due Diligence in KYC means
where investigation is conducted over and above
identifying and verifying the customer and the
KYC procedures.
beneficial owner.
 Characteristics:
 It involves monitoring of clients and their
1. Rigorous and robust
activities to see if the client does not change its
2. Reasonable assurance
status over time.
3. Relevant adverse information

ONLINE FRAUD THROUGH INCOMPLETE KYC
Hacking: Hackers/fraudsters obtain unauthorized access to the card management system of the banks which are then
issued for the purpose of money laundering.
Phishing: It is a technique used to obtain card and personal details through a fake email.
Pharming: It is a technique similar to phishing where a fraudster installs malicious code on a personal computer or
server which redirects all the click you make on one website to another fraudulent Website without your
consent or knowledge.
Vishing: Fraudsters use the phone to capture your personal information
Smishing: It uses cell phone text messages which contain an URL or phone number, which usually has an automated
voice response system.
Debit card skimming: A machine or camera is installed at an ATM which picks up card related information and PIN
numbers when customers use their cards.
Computer Viruses: Company’s systems are always open to the risk of being infected with nefarious software which
may harvest the information from customer servers.
Counterfeit Instruments: Fake cheques / Demand Drafts are used in a great number of fraudulent schemes.

ILLUSTRATIVE LIST OF KYC DOCUMENTS: CHECKLIST OF DOCUMENT SUBMISSION
1. For opening an account, CDD of the individual

(proprietor) shall be carried out.
Sole Proprietary Firm:
2. Any two of the following documents:

(a) Registration certificate
(b) Certificate / licences issued by the municipal
authorities under Shop and Establishment Act
(c) Sales Tax and income tax returns
(d) CST/VAT/GST certificate(provisional/final)
(e) Certificate/registration document issued by Sales
Tax / Service Tax /Professional Tax authorities
(f) IEC (Importer Exporter Code)
(g) Complete Income Tax Return

CHAPTER 6
SIGNING AND
CERTIFICATION

CONCEPT OF PRE-CERTIFICATION
Certification of correctness of the

document before the same is filed with
the Registrar by a professional including
PCS.
Professional checks the correctness of the

particulars stated in the prescribed forms and
ensures that the particulars stated in the form
are in agreement with the books and records of
the company.
If he notices any defect or finds that the information

provided in the form is incomplete or defective, he
appropriately advices or provides guidance for
completion of document or rectification of defect and
makes pre-certification only after completion of
documents or rectification of such defects.

VARIOUS CERTIFICATION BY COMPANY SECRETARY IN PRACTICE
INC-21, INC-22, INC-28, PAS-3, SH-7, CHG-1, CHG-4, CHG-9, MGT-14, DIR-6, DIR-12, MR-1, MR-2, MSC-1, MSC-3, MSC-4,
GNL-3, ADT-1, NDH-l, NDH-2, NDH-3.
E-form DIR-3 and e-form DIR-3-KYC shall be filed along with attestation of photograph, identity proof and proof of residence
of the applicant by the CA/CS/Cost Accountant.
The Annual Return of the company in form MGT-7 shall be signed by the CS and where there is no CS, by a PCS.
Rule 11(2) of the Companies (Management and Administration) Rules, 2014 - annual return - filed by a listed company/company-
paid-up share capital of ten crore rupees or more or turnover of fifty crore rupees or more – certified by - PCS (Form No. MGT-8).
PCS to certify that all certificates have been issued within thirty days of the date of registration for transfer - Regulation 40(9)
of SEBI (LODR) Regulations.
Every listed entity and its material subsidiary is required to conduct a secretarial audit by a PCS and attach its report in
format MR-3 – Regulation 24A of SEBI (LODR) Regulations.
The following e-forms filed by companies

1. GNL-1 – Optional pre-certification by the CA/CS or the Cost Accountant in whole-time practice
2. DPT-3 - Certification by Auditors of the company
3. MGT-10 - Certification by a Company Secretary in whole-time practice
4. AOC-4 - Certification by the Chartered Accountant or the Company Secretary or by the Cost Accountant, in whole-time practice.
SIGNING AND CERTIFICATION OF ANNUAL RETURN
1. Memorandum and Articles of Association.
2. Forms & receipts filed with the Registrar of Companies.
3. Statutory Registers
4. Minutes of the Meetings

PCS can ask for
all the
necessary 5. Attendance Registers of all meetings.
information or
document as 6. Copy of Latest Financial Statements along with the Boards Report and Auditors
may be required Reports.
for conducting
verification.
7. Shareholding pattern and its break up.
8. List of Promoters.
9. Listing and Trading Approval(s) from Stock Exchanges.
10. Other Statutory Registers and Records

SIGNING OF ANNUAL RETURN (MGT-7)
● Annual Return is required to be signed by a Director and the Company Secretary, or where there is no
company secretary, by a company secretary in practice.
● In case of OPC and small company same shall be signed by the Company Secretary or where there is no
company secretary, by the director of the company
CERTIFICATION OF ANNUAL RETURN (MGT-8)
The annual return of every listed company/company having a paid-up share capital of Rs. 10 crore or more
having turnover of 50 crore rupees or more shall be certified by a PCS in the Form No. MGT-8, with respect to
following points:
1. The facts disclosed in annual return are correct and adequate
2. The Company has complied with the provisions of the Act & Rules during the financial year in respect of:
● Status
● Maintenance of registers or records
● Closure of Register of Members Security holders.
● Advances or loans to its directors and persons or firms or companies referred in section 185 of the Act.
● Contracts/arrangements with related parties
● Declaration/ payment of dividend or transfer of unpaid/ unclaimed dividend/ other amounts to the Investor
Education and Protection Fund.
● Appointment / reappointment/ filling up casual vacancies of auditors
● Alteration of the provisions of the memorandum and / or articles of association of the Company.
● Issue, allotment, transfer, transmission or buy back of securities.

CONSEQUENCES OF NON-FILING ANNUAL RETURN
1. For the Director 2. For the Company
Penalty Rs. 10,000 ( continuing failure penalty of Rs.100 for Penalty Rs. 10,000 ( continuing failure penalty of Rs.100 for
each day) - maximum Rs.2 lakhs each day) - maximum Rs.2 lakhs
Not filed for five financial years – wind up

If the company has not filed for 3 financial years, then cannot
be re-appointment for a period of 5 years.
Not filed its Annual Return for last two financial years -
“inactive company”.
Liable under section 447
Not filed its Annual Return for two financial years - enter its
name in the Register of Dormant Companies.

CHAPTER 7
SEGMENT-WISE ROLE
OF COMPANY
SECRETARIES
COMPANY SECRETARY IN EMPLOYMENT
COMPANY SECRETARY AS CORPORATE

APPOINTMENT AS WHOLE TIME COMPANY MANAGER
SECRETARY
Every Listed company or Public company having - 1. has an in-depth knowledge of the functioning of the
Paid up share capital 10 crore or more or company
2. is available at all times to discuss issues in depth
Private company - having paid up share capital of 10 and provide immediate response to queries
crore or more 3. the Company Secretary assists the chairman in
preparing for meetings
COMPANY SECRETARY TO ACT AS

COMPANY SECRETARY AS COMPLIANCE
AUTHORISED REPRESENTATIVE OF A
OFFICER:
1. Ensuring compliance with the regulatory provisions
COMPANY OR ITS BOARD:
2. Ensuring that the correct procedures have been 1. National Company Law Tribunal
followed to maintain correctness and authenticity of
2. Competition Commission of India
the information.
3. Co-ordination with and reporting to the Board, 3. Securities Appellate Tribunal
recognised stock exchange and depositories.
4. Registrar of Companies
4. Monitoring email address of grievance redressal
division 5. Consumer Forums
6. Tax Authorities, etc.
COMPANY SECRETARY IN PRACTICE
COMPANY SECRETARY AS SECRETARIAL

COMPANY SECRETARY IN REPRESENTATION
AUDITOR:
SERVICES
The following classes of companies are required to obtain
Can appear before the following authorities as an
Secretarial Audit Report;
authorized representative of the company and its board:
1. Every listed company;
1. National Company Law Tribunal
2. Every public company having a paid-up share capital of
2. Competition Commission of India
fifty crore rupees or more; or
3. Securities Appellate Tribunal
3. Every public company having a turnover of two
4. Registrar of Companies
hundred fifty crore rupees or more
5. Consumer Forums
4. Every company having outstanding loans or borrowings
6. Tax Authorities
from banks or public financial institutions of one hundred
7. Other quasi-judicial bodies and Tribunal
crore rupees or more.
COMPANY SECRETARY AS IPR EXPERT
a) IPRs under TRIPs Agreement of WTO

b) Anti-dumping, subsidies and countervailing duties
c) Foreign Trade Policy and Procedures and issuing certificates under the same
d) Intellectual Property licensing and drafting of Agreements

COMPANY SECRETARY AS INTERNAL AUDITOR
The following class of companies are required to appoint
an internal auditor:
1. Every listed company
2. Every unlisted company having:

● Paid up share capital of fifty crore rupees or more during
the preceding financial year; or
● Turnover of two hundred crore rupees or more during
● Outstanding loans or borrowings from banks or public
financial institutions exceeding one hundred crore
rupees or more at any point of time during the preceding
financial year; or
● Outstanding deposits of twenty-five crore rupees or more
at any point of time during the preceding financial year;
3. Every private company having:

● Turnover of two hundred crore rupees or more during
● Outstanding loans or borrowings from banks or public
financial institutions exceeding one hundred crore
rupees or more at any point of time during the preceding
financial year.

CHAPTER 9
SECRETARIAL AUDIT

Secretarial audit
• conducted to audit non-financial aspects of the company.
• involves an independent verification of the records, books, papers and documents by a Company Secretary to check
the compliance status of the company
• Based on the principle of “Prevention is better than cure” rather than post-mortem exercise
APPLICABILITY OF SECRETARIAL APPOINTMENT OF

NEED FOR SECRETARIAL AUDIT AUDIT UNDER COMPANIES ACT, SECRETARIAL AUDITOR
1. To ensure that the legal and 2013 Only a Company Secretary who has
procedural requirements are a. Every listed company; obtained certificate of Practice can
complied. b. Every public company having a conduct a secretarial audit.
2. Provides a level of confidence to paid-up share capital of 50 crore As per rule 8 of the Companies
(Meetings of Board and its Powers)
the directors & key managerial rupees or more; or
Rules, 2014, secretarial auditor is
personnel etc c. Every public company having a required to be appointed by means of
3. Directors can concentrate on turnover of 250 crore rupees or resolution at a duly convened meeting
important business matters more of the Board of Directors of the
4. Strengthen the image and goodwill d. Outstanding loans or borrowings company. He should be appointed at
of a company in the minds of from banks or public financial the beginning of the financial year and
as a good practice, the Secretarial
regulators and stakeholders institutions of 100 crore rupees
Auditor should submit a report to the
5. It helps the investor in analyzing or more. Board at the end of each quarter
the compliance level of companies. Shall attach the Secretarial + reporting about the compliances of the
board report(form MR-3.) company.

APPLICABILITY OF SECRETARIAL AUDIT UNDER SEBI (LODR) REGULATIONS, 2015
Listed Entity means an entity whose designated securities are listed, on a recognised stock exchange(s), in accordance with the listing
agreement entered into between the entity and the recognised stock exchange(s).
Designated Securities includes the equity shares, convertible securities, non-convertible debt securities, nonconvertible redeemable
preference shares, perpetual debt instrument, perpetual non-cumulative preference shares, Indian depository receipts
Material subsidiary mean a subsidiary, whose income or net worth exceeds ten percent of the consolidated income or net worth respectively,
of the listed entity and its subsidiaries in the immediately preceding accounting year.
Subsidiary means a company in which the holding company –

(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary
companies
Net worth means the aggregate value of the paid-up share capital and all reserves, after deducting the aggregate value of the accumulated
losses, deferred expenditure and miscellaneous expenditure not written off, but does not include reserves created out of revaluation of assets
or amalgamation.
Exemption
1. The listed entity having paid up equity share capital not exceeding rupees ten crore and net worth not exceeding rupees 25 crore,
as on the last day of the previous financial year.
2. The listed entity which has listed its specified securities on the SME Exchange.

BENEFITS OF A SECRETARIAL AUDIT
● Ensures that goals and objectives of the company are BENEFITS OF SECRETARIAL AUDIT TO
being achieved and company is updated with the latest developments in
STAKEHOLDERS:
business and the law governing the corporate entities
● The extent and complexity would depend on size of business, area of

operations, turnover, type of businesses, the number of shareholders and
employees, etc. 1. PROMOTERS
2. NON-EXECUTIVE/INDEPENDENT DIRECTORS
SCOPE OF SECRETARIAL AUDIT 3. GOVERNMENT AUTHORITIES/REGULATORS
4. INVESTORS
5. OTHER STAKEHOLDERS
• Companies Act, 2013
• Securities Contract (Regulation) Act, 1956
• The Depositories Act, 1996 In terms of Form MR-3, the Secretarial
• Foreign Exchange Management Act, 1999
auditor needs to examine and report the
• Regulations and Guidelines prescribed under the Securities and
Exchange Board of India Act, 1992 (‘SEBI Act’) compliance of the following:
• ‘Other laws as may be applicable specifically to the company Secretarial
Auditor

PROCESS OF SECRETARIAL AUDIT
1. APPOINTMENT OF SECRETARIAL AUDITOR 6. AUDIT PLAN AND BRIEFING OF STAFF
2. COMMUNICATION TO EARLIER OFFICER 7. TESTING INTERVIEWS AND ANALYSIS
3. ACCEPTANCE OF APPOINTMENT 8. WORKING PAPERS
4. PRELIMINARY DISCUSSIONS AND SURVEYS 9. AUDIT SUMMARY FOR DISCUSSIONS
5. PRELIMINARY MEETING 10. SUBMISSION OF SECRETARIAL AUDIT REPORT

VERIFICATION OF COMPLIANCES
COMPLIANCE UNDER COMPANIES ACT, 2013  Details of change in shareholding of the promoters and top ten
shareholders of the Company under Section 93.
 Memorandum and Articles of Association
 Details with respect to maintenance of cost records and appointment of
 Forms filed with the Registrar of Companies with receipts.
cost auditor.
 Index of Meetings held during the financial year.
 Details of appointment of Auditor and Internal auditor.
 Minutes of the Board, its Committees and of General meeting.
 The list of Related Party Transactions.
 Proof of Circulation of Notice and Agenda of Board meetings, Committee
 Indebtedness Certificate signed by Company Secretary/ CFO of the
meetings and the General meeting.
Company.
 Proof of circulation of Draft Minutes and Final Minutes of meeting of
 Listing and Trading Approval(s) from Stock Exchanges.
Board and its committees.
 Change of name of the company, change in the face value of the company,
 Attendance Register of Board and committee meetings
new ISIN No. of the Company in respect of the allotment or as a result of
 All statutory registers.
any change in capital structure due to any corporate action taken by the
 Copy of financial statement along with notes to accounts and Auditor
Company during the financial year under audit.
Report.
 Corporate Action Forms filed by the Company with Depositories.
 Report of Internal Auditor.
 Equity Shareholding pattern and its break up as at the close of the
 Notices of annual and event based disclosure of directors’ interests.
financial year.
 Copies of contracts made between the company and any of the related
 Any orders received by the company from the High court/Tribunal or from
parties.
any other regulatory body.
 Shareholder List, details of Share Transfers which have taken place
 Compliance record under FEMA with respect to FDI, ECB and ODI as
during the financial year
applicable.
 Copy of Share Transfer Deeds.
 Copies of Shareholders and joint ventures agreement, if any.
 Instruments creating, modifying or satisfying charges.
 Copy of Declaration received from Independent Director u/s 149(7).
 Forms relating to Disclosures from Directors.
 Corporate Social Responsibility (CSR)
 Certificate from RTA stating the number of shareholders as on the close of
 Directors and Key Managerial Personnel (KMP)
the financial year.
 Bank Statements relating to transfer of Dividend to separate bank
 Certified true Board Resolution for any type of corporate actions taken by
account, proof of dispatch of dividend within 30 days of Dividend
the Company.
 Advertisement/circular relating to Deposits; Credit rating certificate,
 Details of the Holding and Subsidiary Companies
deposit insurance, if any
 Complete details of Shares and Debentures issued during the year.
 Such other documents as required for the purpose of audit
IDENTIFICATION AND COMPLIANCE The Secretarial Auditor may take note of various laws applicable to the
Company and should apply his own efforts to identify various other laws as
OF SPECIFIC APPLICABLE LAWS
may be applicable to the company
every company has to observe Secretarial Standards with respect to General and
Board meetings as specified by the Institute of Company Secretaries of India
(ICSI). The Secretarial Standard-1 is applicable to the Meetings of Board of
Directors of all companies incorporated under the Act and The Secretarial REPORTING ON THE
Standard-2 is applicable to all types of General Meetings of all companies CONSTITUTION OF THE BOARD
incorporated under the Act except.
The Secretarial Auditor shall verify that the company has followed the
applicable clause of the Secretarial Standards
The Secretarial Auditor shall verify that during the year the Board of Directors of
REPORTING ON COMPLIANCE
the Company is duly constituted with proportion of Executive Directors, Non-
WITH THE APPLICABLE CLAUSE Executive Directors, Independent Directors, and Women Director as required
OF SECRETARIAL STANDARDS under the applicable Laws, Rules & Regulations
REPORTING ON BOARD
The Secretarial Auditor shall verify that during the year adequate notice is
given to all directors at least seven days in advance. PROCESSES

The Secretarial Auditor shall confirm that there are adequate systems
REPORTING OF THE ADEQUACY and processes in the company to ensure compliance with applicable laws,
OF SYSTEMS \ PROCESSES rules, regulations and guidelines.
Secretarial Auditor is required to report and provide details of specific

REPORTING ON THE
events and corporate actions that occurred during the reporting period
having major bearing on the affairs of the company in pursuance of SPECIFIC EVENTS
above referred laws/rules & regulations
COMPANY SECRETARIES ACT, 1980
The Company Secretary in Practice shall be liable for professional or other misconduct
mentioned in First or Second Schedule or in both the Schedules to the Company Secretaries
Act, 1980 and where held guilty, be liable for the following actions: Where found guilty of
professional or other misconduct mentioned in the First Schedule:
a) Reprimand;
b) Removal of name from the Register of members up to a period of three months;
c) Fine which may extend to one lakh rupees.
where found guilty of professional or other misconduct mentioned in the
Second Schedule:
a) Reprimand;
b) Removal of name from the Register of members permanently or such period as decided by
the Disciplinary Committee;
c) Fine which may extend to five lakh rupees.
CHAPTER 10
INTERNAL AUDIT
&
PERFORMANCE AUDIT

INTERNAL AUDIT UNDER COMPANIES ACT, 2013
EVERY LISTED EVERY OTHER

PUBLIC COMPANY
COMPANY COMPANY
200 cr
100 cr
50 cr 100 cr
Turn over
Paid-up share Outstandin
capital 200 cr 25 cr
g loans and
borrowings
Outstandin
Outstanding g loans and
Turn over deposits borrowings

APPOINTMENT OF INTERNAL AUDITOR
 Appointed only at the meeting of the board

 The resolution should be filed with the concerned Registrar of Companies in e-Form MGT-14
within 30 days from the date of passing of the said resolution
Reliability and
Review of Internal Integrity of Economical and
Control Systems Financial and Efficient Use of
and Procedure Operating Resources
Information.
SCOPE OF INTERNAL
AUDIT
Compliance with Accomplishment
Review of
Laws, Policies, Plans, of Established
Organizational
Procedure, and Goals for
Structure
Regulations Operations
Safeguarding of
Assets

INTERNAL AUDIT TECHNIQUES INTERNAL AUDIT PROCESS
Establish and communicate the scope and objectives
Review of operating environment: Develop an understanding of the business area under

review.
Describe the key risks

Review Controls
Identify control procedures used to ensure each key risk.
Test Controls
Conduct a test to determine.
Account Details
Report issues and challenges identified and make action
plans and solutions.
Keep follow-ups.

EVALUATION OF INTERNAL AUDIT FUNCTION BY AN AUDITOR
Examination of Review of compliance

Organisational Status financial and with laws and
operating regulations
Scope of Audit Monitoring of internal

Risk management
Function control
Technical Competence Due Professional Care Governance

ROLE OF INTERNAL AUDIT IN ORGANISATION CONTROL MECHANISM
 Detect errors and prevent frauds, Internal audit ensures effectiveness and efficiency of
internal control system
 Not responsible with management’s primary responsibility of designing, implementing
INTERNAL CONTROL: and maintaining internal control.
 Internal audit functions add value to an organization’s internal control system by
bringing a systematic, disciplined approach to the evaluation of risk and by making
recommendations to strengthen the effectiveness of risk management efforts.
The role of internal auditor is as following:

1. Evaluation of the efficiency and effectiveness of controls
2. Recommending new controls where needed or discontinuing unnecessary controls
3. Using control frameworks
4. Developing Control self-assessment

 The internal auditor - often considered as one of the “four pillars” of corporate
governance.
 Helps the audit committee of the board of directors to perform its
CORPORATE GOVERNANCE responsibilities effectively.
 Includes reporting critical internal control problems, informing the committee
about capabilities of key managers, suggesting questions or topics for the audit
committee’s meeting agendas.
 Internal auditors play an effective role in monitoring and evaluating the

effectiveness of the organization’s Risk management processes.
RISK MANAGEMENT  The risks fall under strategic, operational, financial reporting, and
legal/regulatory categories.
 Internal auditors evaluate each activity, or focus on the processes used by

management to report and monitor the risks identified.

APPRAISAL OF MANAGEMENT DECISIONS
a. Whether the decisions are taken after following the decision-making process?
b. Whether such decisions meet the organisation objectives?
c. Whether such decisions are documented in a fair manner?
STEPS IN APPRAISAL OF MANAGEMENT DECISIONS
1. Whether the management decision are well defined or not.

2. Whether the Objectives and desired output has been set out clearly and relate explicitly with the policy or strategy adopted by the
company to help in post event evaluation of the management decisions. Ideally the objectives of the every management decision
should be specific, measurable, agreed, realistic and time-dependent.
3. While taking decision, whether the management has considered the effect of the associated risk, time availability, scale and location,
scope for alternative arrangements with other public bodies, degree of involvement of regulators and civic bodies, capacity of the
market to deliver the required output, alternative asset uses; use of new or established technology, and environmental issues.
4. In case of the major investment decision, whether the various possible options were considered.
5. Whether such potential options are analyzed reviewed in terms of value, costs, benefits, risk and uncertainties of options.
6. Whether the options are selected after due analysis and a consensus decision is taken after a manager has analyzed all the
alternatives,
7. Whether the selected alternative implemented efficiently.

CHAPTER 11
CONCEPTS AND PRINCIPLES
OF
OTHER AUDITS

CORPORATE GOVERNANCE AUDIT
 Provides assurance to the various stakeholders that all the required governance activities have been
accomplished by the organisation and it is conducting its business in a fair manner.
 Helps the stakeholders to ensure that company is in compliance with all the governance norms and ethical
principles are incorporated in the management of the company.
 Corporate Governance audit covers following:

SCOPE OF  Financial and non-financial information’s and disclosures.
AUDIT OF  Rights of stakeholders
CORPORATE  Boards of directors (composition, mix, independence)
GOVERNACE  Boards of directors (composition, mix, independence)
ACTIVITIES:  Risk management
 Strategic plans, programs and guidance on social responsibilities
Accountability:
a. Check there is separation of ownership and control.
b. Check whether executive management is accountable to Board.
CHECKLIST FOR AUDITING c. Check whether board is accountable to shareholders.
CORPORATE d. Check whether there is a board or audit committee policies.
GOVERNANCE e. Check whether the independent directors have powers to play their role effectively.
MECHANISM IN A f. Check whether sufficient number of meetings are held.
COMPANY g. Check whether the auditors of the company have full access to information and authority
to present their view points at board meetings.
CS MUSKAN GUPTA 9532064262
h. Check whether the company has made policies on bribery, fairness, privacy, related party
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transactions etc.
Transparency: Fairness:
a. Investors should be able to obtain a) Check whether all shareowners, including minorities are
information about the rights Any changes treated equitably.
in voting rights should be subject to b) Check whether there is defined procedure for effective
approval resolutions of violations.
b. Check whether there is a timely, accurate c) Check whether the company has pricing policy and fair market
disclosure on all material matters. practice code
c. Check whether the company has a policy
for making political contributions.
d. Check whether the company has insider Responsibility:
trading disclosure and compliance a) Check whether the company has policy on stakeholder’s
practices. rights and social responsibility.
e. Check whether shareholders are allowed b) Check whether the board’s responsibility includes review
to keep their views on the remuneration and guiding of corporate strategy, major plans of action,
policy for board members and key risk policy, annual budgets and business plans; setting
executives performance objectives etc.
Shareholder’s interest:
a) Check whether shareholders should have the right to participate in and be sufficiently informed on, decisions concerning
fundamental corporate changes such as:
i. amendments to the statutes, or articles of incorporation or similar governing documents of the company;
ii. the authorisation of additional shares; and
iii. extra-ordinary transactions, including the transfer of all or substantially all assets that in effect result in the sale of the
company
b) Check whether the capital structure which enable the shareholders to exercise control disproportionate to their holding, is
disclosed.
c) Check whether all shareholders have ownership rights.
d) Minority shareholders should be protected from actions of majority.
e) Members of the Board and key executives have to disclose their interest in the transaction.
f) Minority shareholders should be protected from abusive actions of majority shareholders and should have effective means of
redressal.

CORPORATE SOCIAL RESPONSIBILITY AUDIT (CSR)
Section 135(5) of the Companies Act, 2013,
500 Cr - Net worth

1000 Cr - Turnover CSR CSR Committee CSR Policy Min 2% Avg net profit of 3 preceding
5 Cr – Net profit financial year
Contribution:
Cannot Contribute to own cannot contribute to foreign country

employees
Schedule VII provides the list of activities which could be taken by the company as their CSR Activities.
Purpose of CSR Audit:

Objective of CSR Audit:  To ensure compliance with the provisions
 To provide a transparent, monitoring mechanism to
 measure the social performance of the company oversee the activities of the company.
against the social objectives.  To assess the life cycle of CSR project.
 oversees that at what level business operations  To financially review the projects
are aligned towards the benefit of the society.  To evaluate internal control and governance
framework of the company.

CHECKLIST FOR
CORPORATE SOCIAL  Check if company is required to form a CSR Committee?
RESPONSIBILITY
 If yes, then if company has constituted CSR Committee and Board consist of at
PROVISIONS UNDER
COMPANIES ACT, 2013
least three directors, out of which at least one director is an independent
director.
 Whether the company has CSR policy approved by the CSR Committee.
 Whether the CSR committee has recommended list of CSR projects or
programme provided under schedule VII.
 CSR Committee has recommended the amount to be spent on CSR activities.
 Check whether the CSR activities were under taken as per CSR policy and
projects, programs or activities and it excludes activities undertaken in normal
conduct of the business.
 The company has instituted a transparent monitoring mechanism for
implementation of the CSR projects or programs or activities undertaken by the
company.
 The company has disclosed the contents of the policy in board’s report and at
its website.
 In case the company does not spend the specified amount (i.e. at least two
percent of the average net profits made during the three immediately preceding
financial years), the reason has been specified in the Board’s report.
 The net profits of the company are in accordance with the provisions section
198 of the Companies Act, 2013.
 The company has complied with all other requirement of the CSR Rules.
 The CSR audit provide an understating of company is position in CSR and also
provide an independent assurance on CSR commitment to stakeholders.

TAKEOVER AUDIT
Takeover audit is conducted to ensure compliance with Companies Act, 2013 and
SEBI (Substantial Acquisition of Shares and Takeover) Regulations, regarding
disclosures, offer price, pricing etc. Takeover audit includes:
1. Identify categorises of acquirer i.e. promoter,

promoter group, person in control, persons acting
in concert, associates, immediate relatives. 4. Ensuring that the timely disclosures have been made
by promoters, members of promoter group and PAC’s
relating to acquisition, transfer and encumbrance
2. Effective monitoring of the holdings of promoters,
members of promoter group and PACs and take
necessary action as required
5. Ensuring that timely intimation is sent to stock
exchanges in respects of transfers exempt under
SEBI (SAST) Regulations,2011.
3. Ensuring that timely reports are filed in respect of
transfers exempt under SEBI (SAST) Regulations
with stock exchanges and SEBI, if applicable.
6. Thoroughly examine the takeover regulations
through checklist and timeline for compliances.

INSIDER TRADING AUDIT
CHECK POINTS
FOR VERIFICATION OF
COMPLIANCE UNDER THE SBI
(PROHIBITION OF INDISER TRADING)
REGULATIONS, 2015
 The company has appointed a compliance officer.

 The Board of Directors of has formulated a code of practices and procedures for fair disclosure of unpublished price
sensitive information.
 The Code has been put on the website of the company and a copy of the same must be sent to the stock exchange.
 The Company has formulated code of conduct to regulate, monitor and report trading by insiders.
 Every such code of practices and procedure relating to unpublished price sensitive information and every document
thereto has been promptly intimated to the stock exchange where the securities are listed.
 Disclosures have been taken by from KMPs and their immediate relatives regarding trading.
 The connected person or class of connected persons have made disclosures of holdings and trading in securities of
the company in such form and at such frequency as may be determined by the company in order to monitor
compliance with these regulations.
 The Compliance officer has reviewed and monitored the trading plans if any, submitted by any insider and
approved the trading plan that it has not violated these regulations.
 The Compliance officer has notified the trading plan to the stock exchange.
 The Company has received the initial disclosure from every promoter, Key Managerial Personnel (KMP) and
Directors with respect to the securities held by them in Company.

 The Company receives disclosure by every person on appointment as KMP or Director or upon
becoming a promoter within seven working days of such appointment or becoming promoter.
 The Company is regular in receiving continual disclosure from the promoter(s), employees and
directors with respect to the number of securities acquired or disposed of within two trading days of
such transaction, if such transactions exceed Rs.10,00,000 or such other value as may be specified
in a calendar quarter.
 The Company has notified the particulars of such trading to the stock exchange within two trading
days of receipt of the disclosure or from becoming aware of such information.
 The Company follows Chinese wall procedures & processes as per the norms contained in the code of
conduct, wherever applicable.
 The company or any of its promoters, director, Key Managerial Personnel, officer or employee has
been convicted by SEBI with respect to Insider Trading in the past or present.
 Any action taken against persons responsible for non- adherence with respect to formulation of code
of conduct.
 Any other prevention mode with respect to insider trading as adopted by the Company.

CYBER AUDIT
Cyber audit is performed avoid cyber security risk. The objective of cyber audit is to assess the cyber security
policies and procedures, identify risk and report the same to the Board.
The scope of cyber audit includes:
1. Data security policies.
2. Data loss prevention measures deployed.
3. Detection/prevention systems deployed.
4. Security controls established.
5. Incident response program implemented.
Management: management of the company is responsible to assess the risk of the

company, therefore it has to assess that cyber security controls exist and are
operating effectively.
Dimension of Risk Management: the objective of any risk assessment is twofold; firstly, to identify the level
the Cyber of risk and secondly to identify how the risk is required to be assessed. Thus, is important to
Security Audit have a proper process, competent cyber security resources and a governance framework to
Process: ensure that appropriate is mechanism is established to assess risk competently.
Internal Audit: Cyber Auditing is a security measure which is critical in protecting the enterprise in
today’s global digital economy. Internal auditor helps enterprises with the challenges of managing
cyber threats, by providing an objective evaluation of the controls and making recommendations to
improve them as well as assisting the senior management and the board of directors understand and
respond to cyber risks.
ENVIRONMENT AUDIT
Environment’ includes Water, air and land and the inter-relationship that exists between water,
air, land, human beings, plants and other living creatures.
Environmental Compliance Audit means company’s compliance with

While conducting following laws:
Environmental
environmental audit Compliance
following issues are Audits Air Pollution: Radiation:
considered: ● The Air (Prevention and Control of ● The Atomic
Pollution) Act, 1981 Energy Act,
● The Factories Act, 1948 1962.
Initiatives taken to prevent ● The Industries (Development and
pollution Regulation) Act, 1951
Water Pollution: Miscellaneous
● The Water (Prevention and Control ● The Environment
Conservation of renewable of Pollution) Act, 1974 (Protection) Act, 1986
and non-renewable resources ● The River Boards Act, 1956 ● The Public Liability
● The Merchant Shipping Insurance Act, 1991
Consequences of violating (Amendment) Act, 1970. ● The Indian Forest Act, 1927
environment laws, rules and ● The Wildlife (Protection)
regulations Pesticides:
● The Poison Act, 1919 Act, 1972
● The Factories Act, 1948 ●The Forest (Conservation)
Consequences of vicarious Act, 1980
liability imposed by the ● The Insecticides Act,
government, courts etc 1968

Process of Environment Audit
1. Understanding the industrial activity
Environmental Management Systems Audit
and Pre-audit or planning stage: involves
ISO 14001 is a voluntary international
collection of background information of the
standard for environmental management
entity, identification of objectives and
systems (“EMS”),
scope of audit, formation of audit team
and development of audit plan.
● Identify and control the environmental
impact of its activities, products or services
2. On-site or Field Audit: Once the objective
● Improve its environmental performance
for conducting audit has been identified,
continually, and
necessary meetings and interviews should
● Implement a systematic approach to set
be conducted, areas of concern should be
environmental objectives and targets and
identified, documents and records should
achieve them.
be reviewed etc.
Published by International Organization for
3. Assessing the impact and post-audit:
standardization in the year 1996 and later
includes final evaluation of audit findings,
updated in the year 2005.
preparation of preliminary report, getting
approval of management, and submitting
Provides highly effective, globally accepted
final environment audit report to the
framework for establishing and continually
auditee.
improving the effectiveness of environmental
management, reducing both, environment risk
4. Follow up or review: Verify the action
and environmental costs.
taken on audit findings and
recommendations

CHECKLIST ON ENVIRONMENT AUDIT
Legal and Other Requirements:
Environment Policy: Environment Aspects: 1. Whether a procedure has been
1. Whether the company has 1. Whether a procedure has been established to identify laws and
prepared its environmental policy. established to identify the regulations, with respect to
2. Whether such policy is based on environmental aspect of its past and environment, applicable on the
significant environmental aspects current activities. company.
and corporate policy. 2. Whether significant environment 2. Are current copies of all
3. Whether the policy is prepared aspects have been considered before applicable regulatory and other
considering environmental establishing Environment requirements accessible to
impacts of the company and Management System. personnel as necessary
regulatory requirements. 3. Following environmental aspects are 3. Have all further agreements,
4. Does the policy include considered in detail: a) Air pollution business related agreements and
commitments: - Continual b) Soil pollution c) Water pollution agreements with public authorities,
improvement - Prevention of d) Use of hazardous material e) that organization needs to fulfill
pollution - Comply with Utilisation of resources f) Raw been integrated in the procedure.
environmental legislation and material and natural resource usage 4. Guideline other than legal
other requirements 4. Are the following operational requirements (e.g. company policy,
5. Does the policy provide a aspects considered: - Normal industry codes and practices, etc.)
framework for setting operating conditions - Abnormal 5. Are the following licenses,
environmental objectives and operating conditions (e.g. start up permits and approvals available to
targets. and shut down conditions, demonstrate full legal compliance?
6. Is the policy documented, maintenance, incidents) – ● Air emission permits
implemented, maintained and Development of new or modified ● Wastewater discharge permits
communicated to all persons processes, products or services ● Permits and licenses related to
working for or on behalf of the 5. Actual and potential emergency dangerous goods
organization. conditions and accidents. ● Environmental fees, e.g.
7. Is the policy available is freely 6. Have significant aspects been wastewater discharge fee
available to public. identified ● Registration at authorities
INFORMATION SYSTEMS AUDIT
Conducted to ensure that computer system ensures protection of data and maintains data integrity.
IFS is a complete examination of a targeted system.
SEBI has made it mandatory for stock broker who use algorithmic trading to conduct systems audit mandatorily
Management Controls:
Application Controls:
a. Security Policy and Standards
Whether each of the Computer Systems and
b. Constitution of Steering Committee
subsystems must have its own set of controls for
c. Business Continuity Planning
Inputs, processing & outputs
d. Systems Development Methodology
Organizational
Controls:
Whether the roles,
responsibilities and duties
of User Departments and
IT Department are defined
Operational Controls: Ensure adequate environmental controls:
1. Whether monitoring of physical assets are 1. Whether proper facilities of Air-conditioning (dust,
done in regular intervals temperature & humidity controls), Power
2. Any discrepancy in the data collected and the Conditioning are timely reviewed?
current data of physical assets are addressed 2. Whether the cable connections/electronic points
immediately or not? are functioning properly or not is reviewed on
regular intervals?
CS MUSKAN GUPTA 9532064262| YES ACADEMY, PUNE 8888 235 235

FORENSIC AUDIT
● An examination of financial records to find any illegal financial activity.
● Highly specialized, and the work requires detailed knowledge of fraud investigation techniques and the legal framework.
Forensic accountants are trained to look beyond the numbers and has necessary skills and experience to accept the work.
● Forensic Audit is done in two phases:

1. Investigation Services
2. Litigation Services
Procedure of Forensic Auditing Investigation:

1. Accept the Investigation
2. Planning the Investigation
3. Gathering Evidence
4. Reporting
5. Court Proceeding
Purpose of Forensic Audit:

1. Corruption 2. Asset Misappropriation 3. Financial statement fraud
ILLUSTRATIVE CHECKLIST ON FORENSIC AUDIT

1. Whether the fraud detected is at the management level or employee level?
2. What was the reason or motive behind the fraud?
3. How is the internal check on cash transactions, raising of invoices etc.?
4. Who is responsible for the checking if all the things are in order in regular intervals?
5. What is the nature of fraud – corruption, assets misappropriation or financial misstatement?
6. Whether the entries passed are properly reflected in the balance sheet without any omission?

SOCIAL AUDIT
.
 Formal review of a company’s endeavors in social responsibility.
 Process of reviewing official records and determining whether state reported expenditures reflect the actual money spent
on the ground.
 Addresses the issue of shareholders and poor groups whose voices are rarely heard
OBJECTIVES OF SOCIAL AUDIT

1. Assessing the physical and financial gaps between needs STEPS FOR CONDUCTING SOCIAL AUDIT
and resources available for local development.
2. Creating awareness about the services available to the 1. Clarify of the purpose and goal of local body
beneficiaries 2. Identify the stakeholders .
3. Increasing efficacy and effectiveness of local development 3. Performance indicators must be understood
programme. 4. Regular meetings to review and discuss data/information
4. Scrutinizing policies to protect interest of stakeholders on performance indicators should be conducted
and rural people 5. A group of trusted local people including elderly people,
5. Estimating cost that should be provided to the teachers and others who are committed and independent,
stakeholders to be involved in the verification and to judge if the
decisions based upon social audit have been
implemented, should be established.
6. The findings of the social audit should be shared with all
IMPLEMENTATION OF SOCIAL AUDIT
local stakeholders, to encourage transparency and
1. Empowerment of people
accountability
2. Proper Documentation
3. Accessibility of Documents
4. Punitive Action

CHECKLIST ON SOCIAL AUDIT
1. Whether the company has well defined policies for development of the society especially the poor and rural
people?
2. Whether on regular basis the policy is scrutinized?
3. Whether the physical and financial gaps between needs and resources available for local development are
assessed on regular intervals?
4. Whether the voice of the stakeholders and poor people are considered?
5. Are necessary actions taken over them

CHAPTER 12
AUDIT ENGAGEMENT

INTRODUCTION
A contractual agreement between auditor appointing authority to

conduct the audit of auditing.
The audit engagement includes:
New Audit Engagement Recurring audit engagement Changes in audit engagement

 An audit is being conducted for • The Auditor had conducted the • Auditor shall adhere to the
the first time and appointment of audit for the previous period and Standard and initiate a revised
auditor is an initial appointment is requested to conduct the audit Engagement Letter in terms of
 Where the audit for the previous for the subsequent period as well this Standard.
period was conducted by another
Auditor.

OFFER AND ACCEPTANCE OF THE AUDIT ENGAGEMENT
TENDERING PROCESS
ONE TO ONE BASIS
A pre-bid meeting should be conducted with the
• The offer for the audit management to discuss prior year audit results,
engagement may be 1. Select auditee based on following risk and
understand business and environment, audit
initiated by the Auditee assessment:
process and determine nature and conflict of interest
or the auditor but it is etc.
necessary that the
engagement are a. Performance Risk – capacity, resources etc.
2. A technical bid will be submitted as per the
accepted by the requirements of the tender document of the
auditors. management.
b. Reputation Risk
• An auditor may be 3. Sign the engagement letter with the management.

c. Commercials
appointed either as a
result of one to one 4.Before accepting an audit, the Auditor shall
communication between furnish a certificate to the Appointing Authority that:
d. Client acceptance and engagement risk a. The number of audits are within the ceiling
the auditor and the
Management or through prescribed by the ICSI as specified in para 2 of CSAS
a tendering process 1.
2. Communicate his willingness to take up the
followed by the b. No substantial conflict of interest as defined in
audit assignment
Management. para 3 of CSAS-1 exists with the Auditee.
c. There is no restriction to render the professional
3. Conduct a pre- engagement meeting with the services under ICSI Guidelines.
Where the appointment of management d. He is not debarred to undertake such audit under
Auditor is: any law or under the disciplinary mechanism of the
ICSI.
4. Sign the engagement letter with the Management.

AUDIT FEES AND EXPENSES
Audit fee is the fee charged by the auditor to conduct audit. It depends upon several factors including:
1. Size of the organization
2. Nature of business
3. Internal Controls systems & Technology adopted
4. Scope of audit
5. Frequency of audit etc.
Audit fees
 Fair reflection of the value of worked performed
 Mentions in the Audit Engagement Letter – Quantum of fees, billing arrangement, terms of payment
 It shall not be contingent
 Auditor shall not pay or accept commission
 As per Clause 2 of Schedule I of the Company Secretaries Act, 1980, a Company Secretary in Practice shall be
deemed to be guilty of professional misconduct, pays or agrees to pay directly or indirectly any share, commission
or brokerage in the fees or profits of his professional work to any person, other than a member of the Institute or a partner.
 As per Clause 9 of Schedule I – deemed to be guilty if h charges or offers to charge, accepts or offers to accept
fees which are based on a percentage of profits or which are contingent upon the findings

COMMUNICATION TO
CONFIDENTIALITY PREVIOUS AUDITOR
It is the inherent duty of the Auditor to maintain the

confidentiality of any information.
The auditor to refrain from:  The auditor shall intimate the previous auditor,
who was before taking up any audit engagement.
1. Disclosing information
 Communication:
2. Using information for their personal advantage or the by a letter
advantage of third parties. by Registered Acknowledgement or
by courier or
3. He should also maintain confidentiality of by hand or
information disclosed by a prospective client or by an email
employer.
 The Auditor shall wait for a period of 7 days from
4. He Should maintain confidentiality of information the date of communication before accepting the
within audit.
the firm or employing organization.
 Incase information is provided by previous auditor
5. An auditor should take all reasonable steps to ensure and is useful take that into consideration and
that maintain confidentiality.
staff under the auditor’s control and respect the
auditor’s
duty of confidentiality.

INDEPENDENCE AND CONFLICT OF INTEREST
Independence:
Section 141(3) - eligibility criteria for the appointment of
an auditor
Conflict of interest
Section 149(6)- the eligibility criteria of independence
In following cases, it shall be construed that the Auditor has
a substantial conflict of interest :
A combination of both of provisions may be considered
as the guiding criteria for the auditor’s independence. 1. Auditor holds more than 2% paid up share capital or
Following are certain examples where an auditor shall assume to shares of nominal value of Rs. 50,000
have interested in the auditee’s business or enterprise:
1. Holding any security or interest in the company or its 2. Auditor indebted to the Auditee for an amount exceeding
subsidiary, or of its holding or associate company or a Rs. 5,00,000
subsidiary of such holding company.
2. Indebtedness to the company, or its subsidiary, or of its 3. Indebtedness that may seriously impair the independence
holding or associate company or a subsidiary of such holding of the Auditor, irrespective of the amount
company.
3. Having business relationship (direct or indirect) with the 4. Auditor was in employment of the Auditee during
company, or its subsidiary, or of its holding or associate immediately preceding 2 years.
company or a subsidiary of such holding company.
4. Any relative of the auditor is a director or is in employment of
the company as a director or key managerial personnel.
5. Has given a guarantee or provided any security in connection
with the indebtedness of any third person to the company, or
its subsidiary, or of its holding or associate company or a
subsidiary of such holding company

PRE-CONDITIONS OF ACCEPTING OR CONTINUING ANY
ENGAGEMENT
a) Preparation of the secretarial/ non-financial statements in

accordance with the applicable reporting framework in a fair manner.
Whether the
management is
in agreement to b) Development of internal control/systems/procedure to enable the
acknowledge preparation of secretarial/ nonfinancial statements which are free from
and material misstatement.
understands its
responsibility
relating to:
c) Providing access to all information of which management is aware that
is relevant to the preparation/ audit/review etc. of the secretarial/
nonfinancial statements.
The auditor should
check following:
1. Whether the
reporting framework
as required in the d) Providing additional information that the auditor may request from
preparation, management for the relevant purpose and,
performance of audit,
review of the
secretarial/ non-
financial statements is e) Providing unrestricted access to persons within the company from
acceptable; and
whom the auditor wants to obtain audit evidence.

LIMITS ON AUDIT ENGAGEMENTS
235th meeting SA PRC

10 + 5 15
LIMITS
CR + PRC
260th meeting 5 5 10

1. scope of
audit with
reference to
AUDIT ENGAGEMENT LETTER applicable
legislation and
regulations.
 It is a written agreement
required by auditing standards 2. The form of any
that signifies the business 6. Audit fees communication of
results of the
relationship between two audit
parties. FORM AND engagement.
CONTENT OF
 In interest of both the AUDIT
management and the auditor ENGAGEMENT
that the auditor should get an LETTTER
3. The agreement of
audit engagement letter before management to
make available to the
the commencement of the audit 5. Period auditor adequate
to help avoid records, reports and
other information in
misunderstandings with time.
respect to the terms of
engagement. 4. The agreement of
management to inform the
auditor of events occurring
or facts discovered

CHAPTER 13
AUDIT PRINCIPLES
AND
TECHNIQUES

INTRODUCTION
Indian
Independence Confidentiality
Skill and Cinema
Competence
Se
Auditing principles Deepika

are the standards Documentation
which are required to Padukone
be observed by the
auditor while
conducting audit. Bani
some of the
principles are:
Extra
Planning
Audit Royale
conclusions Audit evidence
and reporting

AUDIT TECHNIQUES
Inspection of documents and records:
while conducting audit the auditor examines the
documents and records to verify transactions. This is
called as vouching. While the scrutiny of documents, Observation:
the auditor goes through records and documents and
Auditing techniques are Auditor observes how procedures
examines them carefully, if he comes across any
the methods used by unusual transactions. This is called scanning of are being carried out by the
records. The auditor can rely on the documents organisation to evaluate efficiency
the auditors to conduct
depending on the origin (source) of the documents. and effectiveness of system
the audit. Documents which have their origin in the hands of the followed by the organisation.
third parties and held by third parties are more reliable
than the documents which have their origin in the
organization itself and held by the organization.
Inquiry and confirmation:

Seeking information from persons Computation: Analytical procedures:
belonging to the organization or Auditor conducts analysis to ensure
from outside organization is called An auditor will make consistency of accounting methods
inquiry and Confirming the calculations and verify the and to evaluate the efficiency of the
information available with the accounting records management by comparing the
records of the organization or with results of several years. Analytical
the persons mostly from outside the procedures can be Ratio-analysis,
organization through an inquiry is Reconciliation etc.
confirmation.

AUDIT PLANNING
Before conducting audit, the auditor plans how the audit is to be conducted, to ensure
efficiency, effectiveness and completion of audit in a timely manner. The process of audit
planning should include the following elements:
9. Areas to be classified
1. The purpose and on “Risk” criteria to
objectives. allocate suitable
5. Check points resources.
activities.
10.Determining the extent
2. Legal framework of detailed examination
6. Allocation of work and coverage in terms of
under which the audit is
contents amongst the volume.
being conducted.
staff. 11.Evaluation of internal
controls and professional
3. Significant areas and 7. Time schedules for work carried out by other
issues involved. completion of various agencies / experts and
placing reliance thereon.
tasks/ phases.
12.Materiality
8. Determining timelines considerations and
4. Process and for submission of draft determining the
technique to be adopted. report, discussion threshold, therefore.
thereon with the auditee
and submission of final 13.Structure, contents
report. of the report.
1. The Audit should be planned in such manner that ensures the high quality of audit in
economic, efficient, and effective way and in a timely manner.
ESSENTIALS OF
AUDIT 2. The Audit plan should be documented and should be kept with the audit working
PLANNING: papers.
3. The elements of an audit plan may be similar for different auditee entities. However,
the actual contents may differ from auditee to auditee on the basis of nature, type &
objective of the audit.
For
A 4. The audit plan should be flexible enough to accommodate modifications which may be
successful necessary and should be carried out with the approval of team leader.
audit
plan 5. The Auditing staff should be made familiar of the quality control policies and
following procedures of the firm. The hierarchy, responsibility & authority for decision making
points needs to be clearly defined and understood by the audit staff.
should
be 6. The inter related steps and events should be clubbed together.
considered
By
the 7. The plan should be reviewed by an experienced auditor, who is not engaged in the
auditor: assignment. This helps in modification of audit plan and conduct audit efficiently.
SUBSTANTIVE CHECKING
SAMPLING
 Substantive checking is the detailed

checking technique used by the auditor
to obtain audit evidence to support his
Auditor draws a conclusion about large amount of opinion.
data by selecting a sample out of such data.
The sample design and sample size should meet  The main objective of substantive
following criteria: checking is to verify the compliances
and disclosures related to financial
information.
a) Purpose of the audit  Substantive checking confirms

b) Sample size shall be so following:
procedure and population
chosen as to reduce
characteristics shall be
sampling risk to an 1.Verified existence
considered for designing an
acceptable low value. 2.Confirmed rights and obligations
audit sample.
3. Check validity
4.Verified completeness
c) Random sampling, 5.Check occurrence
whenever practicable, shall be d) For sampling, use of 6.Check completeness
considered so that each stratification and value- 7.Confirmed accuracy
sampling unit shall have weighted selection will 8.Verified authorization
reasonable chance of increase audit efficiency. 9.Test cut-off dates
selection.

RISK ASSESSMENT
Audit risk means that an auditor presumes that

there may be some level of uncertainty in
performing the auditor work. The audit risk has
three components:
Control risk: Detection risk:

Inherent risk: Control risk is a risk that Detection Risk is the risk that an
Inherent risk is the possibility that a misstatements which can be material, auditor’s audit procedures will not
misstatement could occur, in the cannot be detected or prevented and detect a misstatement that exist in
absence of internal controls. corrected on a timely basis by the class of transactions that could be
internal control systems. material.

SELECTION OF AUDIT TECHNIQUES
Evaluation of Evidence:
Selection of audit techniques
Once the evidence has been
depends upon the risk, internal
gathered from above mentioned
control system and reliability than
techniques, it is evaluated and
can be placed on the internal
material information is taken into
control system in the organisation.
consideration.
Gathering and Evaluating Evidence:

1. Documents/Records scrutiny
2. Testing, Interviews and Analysis
3. Questionnaires
4. Confirmation
5. Analytical procedure

EXTERNAL EXPERT OPINION
Reference of Expert’s opinion in Audit

The Auditor shall
Report: If by the work of expert the auditor’s
evaluate adequacy of 1. Relevance of
opinion remain unmodified, such work shall
Expert’s work after finding conclusions
not be mentioned in auditor’s report unless
considering following:
provided in any law or regulation. However, if
the opinion of auditor is modified by the work
of and expert, then such work may be referred
in the report along with a specification from
the auditor that such reference to the work of
expert does not reduce the auditor’s
3. Relevance and responsibility of auditor’s opinion.
2. Relevance of
Reasonableness of
methods used
source data
External Confirmation: External confirmation
means direct written response obtained from
the third party on paper or electronic media, in
the form of audit evidence.
Steps for External Confirmation are as
follows:
1.Analyse the information to be confirmed/
5. Agreement of requested.
4. Additional actions
further work 2.Select the party from which such information
is to be confirmed.
3.Design a format for requesting confirmation.
4.Send the request for confirmation.
MATERIALITY
a. The concept of the materiality

draw the whole process of the b. The concept of materiality
Materiality means important
and essential. It is the duty of the audit, the user of the audit report should be considered by the
auditor to consider materiality of the does not require the absolute auditor while determining the
records and documents. There should be accuracy to make informed nature, timing and extent of
neither suppression of material facts nor decision, accordingly a matter is audit procedures and
mis-statements considered material if its omission evaluating the effect of the
or misstatement would reasonably misstatements.
influence the decision of an
intended user of the audit report.
e. In accessing materiality, the prime

consideration is the total value of the
c. The concept of materiality is used
error, however, the values are not the
both at the planning stage of the audit, d. The Auditor has to report the errors
sole consideration, the nature of the
when deciding what and how much which he judges to be material, the
error or the context in which the
work need to be done and in evaluating audit work can be planned in the
transaction occurs are sometimes more
the result of the audit, which is knowledge that it need to detect errors
important and the auditor must always
generally known as planning materiality that are material.
consider these factors, as well as the
and reporting materiality.
value, when deciding whether an error
is material.

RECORD KEEPING
Usually the documents are retained for not less than

seven years from the date of auditor’s report.
Any procedure that the Auditor adopts for retention of
Documentation is a very important aspect
engagement documentation should:
of audit.
1. Enable the retrieval and access to, the engagement
documentation during the retention period.
2. Provide, where necessary, a record of changes made to
engagement documentation after the engagement files
have been completed.
3. Enable authorized external parties to access and
review specific engagement documentation for quality
control or other purposes
All the documents prepared should be

assembled and retained for a specific
period, after the release of auditor’s
report.

CHAPTER 14
AUDIT PROCESS
AND
DOCUMENTATION
Reporting:
AUDIT PROCESS After planning and executing the audit,
audit expresses his opinion about the
audit and prepares the audit report
The Audit Process is divided into three places: 1. Understanding the Auditee and its
operation
2. Understanding the legal
requirements and Applicability of
Execution of audit: Law, Rules and Regulations.
Execution of audit always depends 3. Overview and Assessment, Internal
upon the audit plan and efficiency of Control Mechanism and
audit team. Execution of audit Identification of Material Event and
covers following: Risk Areas.
Audit planning: 1. Sampling of various 4. Risk Assessment considering the
transactions existing Internal Control
2. Sampling of various internal Mechanism
Before conducting the audit, it is
controls 5. Deciding the Audit Approach
necessary to prepare the audit plan
3. Performing control test considering Reliance on the
and programme for conducting audit
procedures Internal Control and Procedures to
effectively and efficiently. Audit
4. Performing analytical be Adopted for Audit
planning involves following:
procedures 6. Identification of the Audit
1. Understanding about the
5. Sampling for substantive test of Evidences
operation of the company
details 7. Designing the detailed Audit
2. Establishing audit objective and
6. Performing of substantive test of Procedure for various Transactions
audit
details & Events based on the Materiality,
3. Assessment of risk
7. Review of working papers Value and Nature
4. Preparation of audit plan
8. Discussion with management on 8. Perform Audit Procedures
5. Preparation of audit programme
draft report prepared 9. Audit Conclusions based on the
Audit Evidence
10. Forming of Opinion
PRELIMINARY PREPARATION
1. Taking note of the details of any significant facts, events or

changes taken place, which is likely to affect the operations of
the company and the audit.
2. Understanding the company’ s activities and financial position

of the company.
3. Assessing the sources of funding, financial targets and brief

First phase in an assessment of company’s financial position.
audit process is a
4. Assessment of internal control system and measures taken to
preliminary avoid risk
preparation.
Activities involved 5. Describing the object of the audit, scope of the audit and type
under preliminary of the audit which is required to be conducted.
preparation are as
6. A summary of specific risk identified and any major problem
following:
likely to be met in the financial statements which require
specific attention.
7. Details of the nature and extent of use to be made of the work

of internal auditors and specialists.
8. Summary of key team members and responsibilities of all the

members, auditor and auditee.
YES ACADEMY, PUNE 8888 235 235 9. Total number of days in which the audit is to be conducted.
INTERACTION THROUGH INTERVIEWS
Interviews
• aims at exploring and giving an overview of a specific area or function, e.g.,
are
by asking for presentations of activities, explanations of formal or informal
conducted networks or interpretation of documents (reports, instructions or, budgets).
for Orientation: • Unstructured Approach
two
out
of
these
three • aims at more specific issues with a view to establishing new
purpose, information, often to be used as audit evidence.
but Examination: • More Structured Approach
it
Is
Never
conducted
for • it is conducted either after examination or orientation.
all • Needs a structured approach
the Confirmation:
three
purposes:

DIFFERENCE BETWEEN AUDIT PLAN AND PROGRAMME
AUDIT PROGRAMME Audit Programme
Audit Plan
1. Audit plan provides the 1. Audit programme
strategies for conducting involves step-by-step
an audit. Example: procedure of how the
understanding the audit is to be
nature of business, conducted, evidence is
defining object and to be collected and
scope of audit etc. what are the
responsibilities of
Audit programme consist of step by step every member of the
2. Plans should be made to
procedures required to performed by the team.
team members. An audit programme is a cover the following
things: (i) Acquiring 2. It lays down the
set of instructions which are to be
followed for proper execution of audit. It knowledge of accounting following audit
is prepared after development of audit systems, policies and procedure to be
plan. But sometimes, auditors have a internal control (ii) followed : (i)
basic audit programme and the same is Establishing reliance on Evaluation process (ii)
used by the auditor, after making few Ascertaining accuracy
the internal control (iii)
modifications according to the audit (iii) Verification of
engagement in hand. Determining the nature,
timing and extent of the Document (iv)
audit procedures to be Scrutiny of supporting
performed (iv) Co- Documents (vi)
ordinating the work to Preparation and
be done submission of audit
CS MUSKAN GUPTA 9532064262 report
YES ACADEMY, PUNE 8888 235 235
CREATION OF MASTER CHECKLIST
Entity operation and organizations:
This checklist contains the matters relating

to: Financial & Non-financial
1. Products manufactured or operations Reporting Requirement: Matter of Shareholder and public
performed by the company. The company’s financial interest:
2. Objects of the company as per the statement, directors’ report, The audit team should identify the
memorandum of association. annual return, websites, filing extent of the shareholder and
3. Capital structure of the company and with the regulators are the public interest in the company’s
funding status. primary source of information activities and financial statement,
4. Details of the promoters and directors of
about the company
the company.
5. Details of subsidiaries, joint ventures
and associate companies.
6. Transactions with the related parties.
7. Material changes took place during the
audit period. Legal and regulatory
8. Recipient of the products/Services of the requirement: Review of Control Environment:
company. control environment means the
a company is required to comply
9. Details of the key managerial personnel. conditions under which the various
with various rules and
10.Details of the functional head responsible policies of the company are
for audit. regulations, on the basis of the
size, nature of business and designed and implemented. Auditor
11.Details of the audit committee and its
operations etc. Auditor is while conducting audit ensures
term of references.
12. Details of the geographical location required to be aware about the that the control environment of the
where the company operates. laws, regulations and company is working properly. If
13.Audit observations of the previous year’s contractual obligations, based on the analysis of the control
etc environment,
WORKING PAPERS AND MAINTENANCE OF WORK SHEET
WORKING PAPERS:
The working papers may include:
1. Audit plan and programme.
 Audit working papers are the 2. Internal control questionnaires
documents prepared or obtained by 3. Checklists prepared for collecting
the auditors and retained by him in evidence.
connection with the audit. 4. Notes and minutes resulting from
interviews.
5. Organizational data, such as charts
 Audit working papers are used to
with job descriptions, process chart.
support the audit work done in order
6. Copies of important documents.
to provide assurance that the audit 7. Information about operating and
was performed in accordance with the financial policies.
applicable standards. 8. Results of control evaluations.
9. Analysis and test of transactions,
 Working papers include all the processes.
evidence gathered by auditor 10. Results of analytical review
indicating what work has been done procedures.
by him and the procedure he has 11. Audit reports and management
followed in verifying a particular asset responses.
or a liability. 12. The audit conclusions reached.

STANDARD WORKING PAPERS: TYPES OF WORKING PAPER:
A standard set of working papers will
include at least the following
documents:
1. General File:
General file provides almost all the Permanent audit file:
relevant information at one place. It Current audit file:
contains information which
provides key information about the contains all information relating
may be required in further
various phases of the audit to the current audit
audits
including planning (audit objectives,
planning comments including etc.),
reporting process, audit programs
and comments for the next audit.
2. Work paper File: WORKING PAPER REVIEW:  Reviewing the audit procedures
Work paper file can direct the Audit and the referenced working
in right direction and may ensure Officer should always review the papers to ensure the working
the completion of work with in working papers to ensure that papers support the procedures
timelines. This file should contain proper standards have been performed and all procedures
the detailed audit procedures and followed, audit evidence supports have been completed.
audit conclusion and the  Determine that the working
detailed audit working papers.
conclusions reached are valid. papers adequately document the
The review will consist of: conclusions reached in the
3. Future Audit Considerations: report.
Auditors are encouraged to develop  Determining compliance with
working paper guidelines.  Ensuring that all findings have
and document future audit ideas been discussed with the
during the course of their work.  Reviewing the audit program
appropriate member of
These should be included in the that outlines the major management.
“Comments for next audit” section of objectives of the audit.  Documenting review notes.
the general file. CS MUSKAN GUPTA 9532064262
IDENTIFICATION OF THE EVENT AND CORPORATE ACTIONS
While conducting audit, the auditor has to go through the 8. Corporate debt restructuring.
various filings with the statutory authorities and below 9. Reference to IBC, 2016 and winding-up petition filed by
mentioned events and information to see if they comply with any arty / creditors
the applicable laws: 10. Amendments to memorandum and articles of
1. Acquisition (including agreement to acquire), Scheme of association
Arrangement (amalgamation/ merger/ 11. Disruption of operations of any one or more units or
demerger/restructuring), or sale or disposal of any unit. division of the Company due to natural calamity
2. Issuance or forfeiture of securities, split or consolidation (earthquake, flood, fire etc.), force majeure or events such as
of shares, buyback of securities, re issue of forfeited strikes, lockouts etc.
securities etc. 12. Effect(s) arising out of change in the regulatory
3. Revision in Rating(s) framework applicable to the Company.
4. Agreements (shareholder’s agreements, Joint venture 13. Litigation / dispute / regulatory action.
agreements, impacting management and affairs of the 14. Granting, withdrawal, surrender, cancellation or
company), which are binding and not in normal course suspension of key licenses or regulatory approvals.
of business. 15. Any other information/event or major development
5. Fraud/defaults by promoter or key managerial personnel that is likely to affect business, e.g. emergence of new
or by Company. technologies, expiry of patents, any change of accounting
6. Fraud/defaults etc. by directors (other than key policy that may have a significant impact on the accounts,
managerial personnel) or employees of Company. etc.
7. Change in directors, key managerial personnel, auditors
and compliance officer.

IDENTIFICATION OF EVENTS HAVING BEARING ON AFFAIRS OF THE COMPANY
The author should identify and report all the events or actions which may
have major effect on the affairs of the company. An event/action may be
considered as having major bearing on Company ‘s affairs in the following
situations:
1. Events/actions altering the Incorporation documents of the Company
2. Changes in the Capital structure of the company
3. Change in the affairs/management of the company
4. Change in the licensing or permission for the business operation of the
company
5. Capacity expansion and utilization of the company
6. Sale/ Disposing of the substantial assets of the company
7. Entering into Joint ventures agreements etc

CHAPTER 15
FORMING AN OPINION
&
REPPORTING
The auditor should express an
UNMODIFIED/UNQUALIFIED unmodified opinion when based on
FORMS OF OPINION OPINION: Audit Evidence, the Auditor concludes
that:
The auditor shall report an unqualified 1. There is compliance with the
opinion if the affairs of the company are applicable law.
found to be free from material 2. The records are free from
An opinion can be of two misstatement and maintained in
misstatements and when there exists
types: accordance with applicable laws.
effective internal control system in the
Unmodified opinion or 3. The information on the affairs of the
organisation as claimed by the
Modified opinion. company are in accordance with the
management and tested by the auditor.
applicable reporting framework.
The auditor would express a modified

MODIFIED OPINION opinion when he concludes that: On the basis of level of severity,
1. There is non-compliance with the modified opinion can be
 when the affairs of the applicable laws in terms of timeliness further classified as:
company are not being and process.
conducted in a fair 2. The records are not free from a. Qualified Opinion
manner, then auditor may misstatement or are not maintained in
express a modified opinion. accordance with the applicable laws. b. Adverse Opinion
3. There are no sufficient audit
 if the auditor modifies his evidence to conclude that there is due c. Disclaimer of Opinion
opinion, the text of the compliance with applicable laws.
opinion should be in bold 4. There are no evidence to conclude
or italics. that records are not maintained as per
the applicable laws.

EMPHASIS OF MATTER
Following are examples of same:

 Emphasis of Matter or
EOM is included in the 1. Legal Uncertainty
audit report to bring
readers attention on 2. Litigation Certainty
specific instance which are
not in general course of 3. Early adoption of new AS
business of the company.
4. New Technology
 Such matters should be
the part of the Directors’ 5. Changes in regulatory environment
Report or the Management
Discussion and Analysis 6. Major Catastrophe
report prepared by the
company. 7. Early Application of new AS
8. Major Catastrophe- continued effect

MATERIALITY
The Auditor shall consider materiality

while forming his opinion and adhere to:
The principle of completeness that requires the

Auditor to consider all relevant Audit Evidence
before issuing a report.
Materiality depicts the importance and

The principle of timeliness that implies preparing
significance of transactions or records of the report in due time.
the company. The auditor has to ensure
that material items are properly and
distinctly disclosed by the company.
The principle of a contradictory process that implies

checking the accuracy of facts and incorporating
responses from concerned persons.
The principle of objectivity that requires the Auditor to apply

professional judgment and scepticism in order to ensure that all
reports are factually correct and that findings or conclusions are
presented in a relevant and appropriate manner.
PROCESS OF FORMING OPINION
The Auditor shall consider Materiality while forming his

opinion and adhere to:
1. The principle of completeness Auditors should strive to develop the following

characteristics in their audit firms, wherever possible
2. The principle of objectivity to provide safeguards against these threats :
a. Auditors should behave with integrity in all their
Threats to objectivity professional and business relationships and strive for
a. Self-interest threat: A threat to the Auditor’s objectivity in all professional and business judgments.
objectivity from a financial or other self interest b. A strong peer pressure should be maintained for
conflict like a direct or indirect interest in Auditee or integrity. Reliance on one another’s integrity should be
fear of losing an audit work. the essential force which permits partners to maintain
b. Self-review threat: The apparent difficulty of their public reputation and personal liability to each
maintaining objectivity and conducting what is other.
effectively a self-review, if any product or judgment of c. strong internal procedures and controls over the
a previous audit assignment or a non audit work of individual Auditors should be established so
assignment needs to be challenged or re-evaluated in that difficult and sensitive judgments are reinforced by
reaching audit conclusions. the collective views of other Auditors, avoiding
c. Advocacy threat: if Auditor becomes an advocate litigation.
for (or against) the Auditee’s position in any
adversarial proceedings or situations, there is an 3. The principle of timeliness
apparent threat to the Auditor’s objectivity.
d. Familiarity or trust threat: A threat that by the 4. The principle of a contradictory process
personality and qualities of the directors and
Management the auditors may become over-
influenced.

THIRD PARTY REPORT OR OPINION
Auditor should adhere to the following before While using the work of Third Party, the Auditor
forming an opinion from the third-party should:
reports or opinions: a. Consider the independence and objectivity of
the Third Party;
b. Take account of the Third Party’s professional
competence for the specific audit;
1. The auditor should indicate the fact that a third
c. Consider the scope of the Third Party’s work;
party opinion has been used and the
d. Determine the cost-effectiveness of using such
circumstances which indicated a need to obtain
work;
such opinion.
e. Perform procedures to obtain sufficient
appropriate Audit Evidence that the work of the
2. The auditor should clearly indicate if third party Third Party is adequate in the context of the
o opinion is provided by the auditee. specific audit (which may require access to the
Third Party’s working papers); and
f. Consider the significant findings of the other
Auditor when analysing and interpreting the results
3. The Auditor should consider the important
of that work. Where these findings are significant to
findfindings/observation of third party
the opinion, Auditor should discuss these findings
with the Third Party and consider whether it is
necessary to carry out additional audit testing him.
4. The Auditor should, if necessary and feasible,
g. When using the work of Third Party, Auditor
carry out an additional test to check reliability of
should carefully consider that, the Third Party may
the third-party report or opinion.
only recognise a duty of care to the addressee of the
audit report. YES ACADEMY, PUNE 8888 235 235
EVALUATION OF AUDIT EVIDENCE AND FORMING OPINION
1. Documentary evidence is more reliable than oral evidence
2. Evidence of which the auditor has direct personal knowledge is the

most reliable evidence
To ensure
competency
and reliability 3. Independent evidence obtained for external sources is more reliable
of information, than internal
: evidence, if that evidence is truly Independent and complete.
the auditor
should ensure
as following 4. Visual evidence is highly reliable for conforming the existence of assets,
but not their ownership value.
5. The auditor may gain increased assurance when audit evidence

obtained from different source is consistent.
6. Photocopies are less reliable than the originals. Auditor should aim at
collecting the source of photocopies
SHARING DRAFT REPORT WITH MANAGEMENT WITH CATEGORY OF RISK INVOLVED WITH
EACH REMARK AND QUALIFICATION
After the exit meeting the auditor will prepare an executive summary which would indicate the audit
issues, the category of risk, their resolution and agreed adjustments. It should contain sufficient
information to provide summary of the evidence which supports audit team’s conclusion.
The executive summary should include:
a) a summary of the auditee’s i) matters brought forward

operations and purpose from previous year audit
f) a commentary on the
b) a summary of the regularly j) a summary of other
framework within which the accounting policies and
important matters for
auditee operates significant account areas
attention
c) an explanation of the audit k) outstanding matters, for
approach and the balance g) a summary of the result of example, outstanding
between test of controls and audit procedures reappointment orders or letter
authorising agreed amendment s
substantive procedures
to the financial statement
d) a summary of the key risk h) details of areas where l) a summary of matters

identified difficult questions of carried forward to the next
principle or judgement were year’s audit and
involved
e) a commentary on key m) a conclusion on the
balances appropriate form of audit
certificate.
Exit Meeting:
Preliminary Draft: The auditor should discuss
At the conclusion with the management about
of fieldwork, the the findings, observations,
Different auditor should recommendations, and text
draft the report and of draft and obtain their
stages present it to the comment on the draft to
management for reach an agreement on the
of comments. audit findings
communication
and
discussion
should
be Formal Draft: Final Report:
after exit meeting, taking The report should be
as into consideration all the submitted to the
discussions, a formal appointing authority
under: or such members of
report is prepared.
management, as
directed.

AUDITOR’S RESPONSIBILITY
PRE-REQUISITE FOR THE REPORTING
The auditor’s report should always include a
section as auditor’s responsibility. It should An Audit report should be:
provide that audit has been conducted in 1. Accurate – should be formed on the basis of proper evidence and
accordance with applicable auditing standards should be free from errors.
and auditor has complied with all statutory 2. Objective- should be fair, impartial, and unbiased and prepared
and regulatory requirements and planned and independently after balanced assessment of all relevant facts and
circumstances.
performed the audit to ensure that company is
in compliance with applicable laws. 3. Clear – should provide all relevant information and should be
understood easily. It should not include any technical words.
4. Concise – should be to the point and avoid unnecessary
FORMAT OF REPORT elaboration, detail and repetitiveness.
Where specific formats (like MR-3 for 5. Constructive – should be helpful to the client and should
Secretarial Audit Report) are prescribed, provide for the improvements where needed.
reports should be prepared according to that 6. Complete – should include all significant and relevant
format and addressed to the Appointing information and observations to support recommendations and
Authority. conclusions.
7. Timely – should be prepared timely to allow management to take
appropriate corrective action.
SUBMISSION OF AUDIT REPORT

After considering the clarifications/replies of SIGNING OF AUDIT REPORT
the management, the auditor should prepare Signature block of audit report should clearly
the audit report in prescribed format. It specify the name of the audit firm, the name of
should contain the opinion of the auditor and the Auditor, along with certificate of practice
should state if in his opinion the company is number and the membership number.
in compliance with the applicable provisions
of the laws.
CHAPTER 16
SECRETARIAL AUDIT-
FRAUD DETECTION
AND REPORTING
TYPES OF FRAUD
Non-financial Fraud:
 Involves the inadequate
Financial & Accounting Fraud: disclosure by the Company to
the public or regulatory bodies,
 Involves fraud relating to
 false reporting of governance
financial statements of the
company. norms and doing business not
according to the regulatory
requirement

DUTY TO REPORT FRAUD
Sec 143
Central Government Audit Committee/Board of Director
1 Crore or more Below 1 Crore
Procedure Procedure
Auditor
Report the matter
Report the matter
Audit Committee/ Board
Board of Directors/Audit Committee
within 2 days
within 2 working days
Specifying:
seek reply within 45 days  Nature of fraud with description
 Approximate amount involved
along with comments  Parties involved
CG Disclosures in the Board’s Report:

 Nature of fraud with description
within 15 days of receipt  Approximate amount involved
 Parties involved
Total 62 working days  Remedial actions taken.

WHO IS CONSIDERED AS AN AUDITOR FOR FRAUD REPORTING?
Statutory Auditors
Branch Auditors appointed
appointed under section
under section 139
139
Cost Accountant in
PCS under section 204 practice under section
148
Internal Auditor or other professionals appointed are not covered under section 143 of the
Companies Act, 2013.

SPECULATION
FRAUD V/S NON-COMPLIANCE
 an act of trading in an
asset or conducting any
financial transaction with
an expectation of
substantial gain.
Fraud:
Non-Compliance:
 Deceiving someone for
 Refers to failure to
dishonestly obtaining a
comply with the laws,
benefit.
rules regulations etc.
 Includes any intentional
or deliberate act to
 May lead to fraud but a SUSPICION
compliant company can
deprive another’s
also be involved in the
property or money by
fraud.
deception or unfair
means.
 Is the positive tendency to

doubt the trustworthiness and
consider something unreliable

PROFESSIONAL RESPONSIBILITY AND PENALTY FOR INCORRECT AUDIT
REPORT
Sec 447 & 448 COMPANY SECRETARIES ACT

 If amount involved is 1% of Turnover
or 1000000 whichever is lower.
FINE: 3 x Amount involved in fraud
and
IMPRISONMENT: 6 months to 10 years
 If amount involved is less than First Schedule Second Schedule

1000000 or 1% of Turnover:
FINE: 50,00,000  Reprimand  Reprimand
Or  Removal of name from Register -  Removal of name from Register
IMPRISONMENT: 5 Years upto 3 months permanently
Or  Fine – 1 Lakhs  Fine – 5 Lakhs
Both
Sec 204
Penalty 2 lakhs

INVESTIGATION OF FRAUD BY SFIO INVESTIGATION PROCEDURE
1. On receipt of a report of the registrar under sec 208 Section 212 (1) - Central Govt. may assign the
investigation (a) on receipt of report of the Registrar
under section 208; on intimation of a special resolution
passed by a company
 in public interest;
 on the request of any Department of CG & SG
2. On intimation of a special resolution
 On receiving information, SFIO may designate as
many inspectors as it wants.
 The investigation is done by following the procedure

3. In the public interest or specified under Companies Act, 2013.
 Powers of Investigating officers are similar to the

powers of Inspector under section 217 of the
Companies Act, 2013.
 On completion of investigation, the SFIO shall

4. On request from any department of the CG & SG submit the Investigation Report to the Central
Government.

CHAPTER 17
QUALITY REVIEW

PEER REVIEW
Meaning:
 Self-improvement process
 Method of evaluation of a person’s work or performance by a group of people in the same occupation,
profession, or industry.
 Conducted to analyse the performance of the individuals and improve quality and standards.
OBJECTIVES OF PEER
REVIEW BENEFITS OF PEER REVIEW
 Technical Standard 1. Provides comfort to the member that he has adhered to all required statutory,
and Proper Systems documentary and regulatory requirements.
 Enhancement of 2. If deficiencies are noticed, then members will have the opportunity to correct their
Quality deficiencies and enhance their performance.
 Peer review process 3. Certificate is issued to the members which may help in improving credibility
and expectations from
the members

QUALIFICATIONS FOR PEER REVIEWER
a. Be a member with at least 10 years of post qualification experience as Company Secretary
b. Be currently holding Certificate of Practice as issued by the Institute;
Further to be empanelled as Peer Reviewer, a member shall not have: -

a) disciplinary action / proceedings pending against him during the past 3 years initiated by the government/
regulatory body/ statutory body;
b) been convicted by a Competent Court whether within or outside India, of an offence involving moral
turpitude and punishable with transportation or imprisonment;

OFFSITE REVIEW: Includes studying the questionnaire given by PU’s and making observations about
possible areas where improvement is possible.
METHODOLOGY
TO BE ONSITE REVIEW: Includes:
FOLLOWED BY • Verification of information given by the PU
REVIEWER • Interaction with the staff & trainees of PU
• Calling for the records of the client to verify whether proper systems and procedures have been
followed
COST OF PEER REVIEW

1. Borne by the PU.. PERIODICITY OF PEER REVIEW
2. If a company requests the – cost shall be borne by such
company.
3. If the Council / Government or any regulatory body requests the
Board for conduct of peer review- the cost shall be borne by the
referred practice unit.
At least once in 5 Years
The Cost of Peer Review shall be paid by the practice
unit within 30 days from the receipt of invoice from
the Peer Reviewer

REVIEW PROCESS:
Review of records
 Selection of Practicing unit
 Inform Practicing unit once they are selected
 Send Questionnaire and 3 Peer Reviewer's name
 Within 15 days fill questionnaire + Choose 1 Peer
Reviewer & mention his name
Compliance Approach: Substantive Approach:
 Confirmation of Peer Reviewer
a. To assess whether proper control • Used if the reviewer does not place
 If he deny - send 3 names of Peer Reviewer again
procedures have been established reliance on the practice unit’s general
If he accepts - Acceptance within 7 days by the practice unit to ensure that controls on attestation engagements
attestation services have been or is of the opinion that the standard
 Additional information to be submitted to Peer performed according to standards. of compliance is not satisfactory.
Reviewer • This approach requires a review of
b. If the size of the Practice Unit is the attestation working papers in
 Select Initial sample small or medium, the Compliance order to establish whether the
Approach may not be appropriate. attestation work has been carried out
 Fixe Date for on - site visit
as per norms of Technical Standards.
 (Prior notice should be given for site visit atleast before
2 weeks)
 After notice, within 30 days’ on-site visit should be REFERRAL OF DISPUTES AND APPEAL
fixed 1. Limitation Period for referral of Dispute
2. Dispute to be decided within 6 Months
 Initial Meeting should be conducted 3. Issuing Directions and their compliance
 Examine the Control system 4. Appeal to Council
 Final sample of attestation is selected

THE COMPANY SECRETARIES (AMENDMENT) ACT, 2006
Section 29 A: 1. Constituted by Central Government

Establishment of 2. Consist of chairman and four other members
Quality Review Board 3. Chairman and members should be experts in the field of law, economics, business, finance or
accountancy
4. Two members of the Board shall be nominated by the Council and other two members shall be
nominated by the Central Government.
Section 29 B: 1. Make recommendations to the Council about the quality of services required to be provided by the
Functions of Board members of the institute.
2. Review the quality of services provided by the members of the Institute including secretarial Audit.
3. Guide the members of the Institute to improve the quality of services.
Section 29 C: The Board shall meet at such time and place and follow in its meetings such procedure as may be
Procedure of Board specified.
Section 29 D:
Terms and conditions
of service of The expenditure of the Board shall be borne by the Council and the terms and conditions of service of
Chairperson and the Chairperson and the members of the Board, and their allowances shall be such as may be
members of Board and specified.
its expenditure

CHAPTER 18
VALUES ETHICS
AND
PROFESSIONAL
CONDUCT
TYPES/BRANCHES OF ETHICS
Applied Ethics:
Descriptive Ethics:
Deals with the believe of Deals with the philosophical
the people. examination from moral
standpoint.
Meta Ethics or Analytical
Normative Ethics:
Ethics:
The study of what you
Basically a high abstract way
should or should not do.
of thinking about ethics.
KEY DIFFERENCES BETWEEN ETHICS AND VALUES
Ethics: Values:
 Provides the guidelines for conduct  Principles and ideals which are necessary in making
 Compels us to follow some action judgement about right or wrong.
 Ethical practices are consistent  Strongly influence the state of mind and act as
 Helps us in deciding what is morally correct or motivators.
incorrect  May differ from one person to another.
 Determines to what extent our options are right or  Tell us what we want to do or achieve in our life
wrong.  Defines our priorities for life.

MODEL ETHICAL PRINCIPLES OF COMPANY SECRETARIES
 Strive for excellence  Set Good Examples
 Be Trustworthy  Respect Confidentiality
 Be Accountable  Be Ethical
 Be Courteous and  Be competent and improve

Respectful continually
 Be Honest, Open and

Transparent

ICSA (UK) Code of Professional Ethics
Integrity
Quality of being honest and having strong moral principles. High Standard of service or professional competence:
It includes: Should be delivered throughout one’s working life, which includes:
 acting professionally in your business dealings  maintaining professional knowledge and skills which are required to
 respecting others at all times perform the role which you are employed to carry out.
 avoiding involvement in any unethical, misleading or illegal  acting competently.
behaviour  respecting the confidentiality of information acquired through
 not accepting or offering improper gifts, hospitality or other professional relationships.
inducements  communicating effectively and promptly with your clients,
 displaying a proper understanding and appreciation of your role colleagues and stakeholders to ensure that they are able to make
and responsibilities informed decisions.
 avoiding conflicts of interest, or, where a conflict arises, making  Upholding requirement of laws.
sure that everyone involved is aware of the interest.
Professional Behaviour:
Transparency: Requires that members conform to the relevant laws of the jurisdiction
or following actions or inactions may result in disciplinary proceedings:
Requires that members are clear and open in their business a) Becoming bankrupt or insolvent
b) Failing to uphold the code of professional conduct and ethics
and professional conduct, which includes:
c) Disobeying any decisions of the Council or of one of its Divisional
a) Being open and frank in any business dealings
Committees
b) Treating all work as if it was reported in the public d) Breaking any of the Institute’s byelaws or Charter or Regulations
domain e) Failing to comply or co-operate with a disciplinary investigation
c) Not conducting any transaction secretly f) Failing to comply with a decision or any conditions made by a
Disciplinary or Appeal Tribunal

The Singapore association of the Institute of Chartered Secretaries and
Administrators (ICSA)
4. Members should not use any confidential

1. Members are required to uphold the Institute’s
information obtained in the performance of their
Charter and comply with the Bye-laws.
duties.
2. Members should at all times safeguard the interests 5. Members should ensure the currency of their
of their employers, colleagues or clients. knowledge, skills and technical competencies in
relation to their professional activities.
3. Members should not enter into any agreement or

undertake any activity which may be in conflict with 6. Members should refrain from conduct or action
the interest of their employer or client or would which diminishes the reputation of the Institute.
prejudice the performance of their professional duties.

ICSI CODE OF CONDUCT ETHICAL DILEMMA
FUNDAMENTAL DUTIES OF
PROFESSIONAL
● Decision-making problem between two possible
moral imperatives where neither of them is
1. Fair dealing totally acceptable or preferable.
2. Confidentiality ● Also known as moral dilemma.
3. Conflicts ● An “absolute” or “pure” ethical dilemma only
4. Integrity of evidence occurs when two (or more) ethical standards
5. Anti-discrimination and apply to a situation but are in conflict with
harassment each other.
6. Inadvertent Disclosure
7. Mistakes of the solicitor
8. Client Documents
9. Dealing with the media ● Some examples of ethical dilemmas
10. Professional Opportunity include:
11. Undertakings A secretary discovers her boss has been
12. Dealing with other persons laundering money, and she must decide
whether or not to turn him in.
A doctor refuses to give a terminal patient
morphine, but the nurse can see the
patient is in agony.
HOW TO RESOLVE ETHICAL DILEMMA COMMON CAUSES OF LOSS OF
ETHICS AND VALUES
1) Unclear Policies
2) Conflict between organisational
When there is a right versus right dilemma, the and individual goals
situation can be resolved by finding the highest 3) Culture Value and background
right. 4) Dynamic and different human
There are three ways to make the best choice when nature
faced with these types of dilemmas: 5) Pressure from management
6) Conflicting Values
7) Ambition and Discrimination
Ends-based Care-based
STRATEGY FOR OVERCOMING

FROM THE EVILS
Rule-based 1) Satisfaction
2) Ends not to justify the means
3) Ethical Leadership
4) Character

CHAPTER 19
DUE DILIGENCE 1
I

 An analysis and risk assessment of an impending business transaction.
OVERVIEW OF  Process by which parties to a business transaction, review confidential, legal,
material and financial information before entering into transaction with
DUE other party.
DILIGENCE  Verify the strategic identification or attractiveness of the target company,
valuation, risk associated
a) Collection of material of information.
OBJECTIVES OF b) Identification of strength and threats and weaknesses.

DUE DILIGENCE c) To improving the bargaining position.
d) Identification of areas where representations and warranties are required

Necessity of Due Diligence:
a. To investigate in to the affairs of business as a prudent business person.

b. To confirm all material facts related to the business.
c. To access the risks and opportunities of a proposed transaction.
d. To reduce the risk of post transaction.
e. To confirm that the business is what as it appears.
f. To create a trust between two unrelated parties.
g. To gain information that will be useful for valuing assets.
h. Representation & warranties for indemnification.
i. Negotiation price concessions.
a) Compliance with applicable laws

b) Regulatory violations or disciplinary actions
SCOPE OF c) Litigation and assessment of feasibility of pursuing litigation
DUE d) Financial statements
e) Past business failures and consequential debt
DILIGENCE f) Fraudulent claims
g) Misrepresentations or character issues
h) Reputation, goodwill and other intangible assets

. STAGES/PROCESS OF DUE DILIGENCE
2. Diligence
a) Deal Breakers
b) Deal Diluters
c) Deal Cautioners
d) Deal Makers’
1. Pre-Diligence
a. Signing the Letter of Intent (LOI)
and the Non-Disclosure
3. Post Diligence
Agreement (NDA)
Result in rectification of non-compliances
b. Receipt of documents from the
company and review of the same found during the course of due diligence.
with the checklist of documents There can be interesting assignments
already supplied to the company. arising out of the diligence made by the
c. Identifying the issues. team of professionals.
d. Organising the papers required for
a diligence.
e. Creating a data room.

TYPES OF DUE DILIGENCE
1) Operational Due Diligence

2) Strategic Due Diligence
 Conducted to assesses the operations of the company.
Conducted to test the rationale behind the transaction and
 Covers aspect such as efficiency of operations and
whether the deal is commercially viable or whether the
weakness or inadequacy of internal control systems.
targeted value would be realized.
 Verifies the various facilities owned by the target
company
3) Financial Due Diligence

 One of the most important types of due diligence as it seeks to check whether
the financials showcased in the Information Memorandum is correct or not.
 Provides a deep understanding of all the company’s financials, including
audited financial statements for last three years, recent unaudited financial
statements, review of accounting policies, review of internal audit procedures,
quality of earnings and cash flow, condition and value of assets, liabilities,
etc,.

Technical Due Diligence
1. Intellectual Property Main objective:

Due Diligence:  to ascertain the nature and scope of target company’s right over the intellectual
property,
 to evaluate the validity of the same and to ensure whether there is no infringement
claims.
 Following should be seen while conducting due diligence:
• Schedule of patents and its application
• Pending patents clearance documents
• Schedule of copyrights, trademarks and brand names
• Any pending claims case by or against the company in violation of intellectual
property.
2. Technology Due  Considers aspects such as current level of technology, company’s existing technology,
Diligence: further investments required etc.
 Help organizations in the decision-making process when acquiring new technologies or
lines of business, or when they need a simple evaluation of how their current
technology is functioning.

Environmental Due Diligence Human Resource Due Diligence
 Analyses environmental risks and liabilities

associated with an organisation.
Includes assessment of people and issues related to such
 Provides information with respect to people, because it is necessary to address the same for
environment risk associated with the company success of any venture. It includes:
1. Analysis of total employees, including current positions,
vacancy, due for retirement.
2. Analysis of current salaries, bonuses paid during last
three years, and years of service.
3. All employment contracts with nondisclosure and non-
competition agreements between the company and its
Ethical Due Diligence employees.
4. Policies regarding annual leave, sick leave and other
forms of leave.
5. Employee Benefit Schemes.
6. A list and description of all employee health benefits and
Ethical due diligence is conducted to identify welfare insurance policies.
the ethical risks in a company. It involves 7. Analysis of employee problems with respect to
review of character of the company, ethical harassment, discrimination.
values, reputation, governance etc.

Competition Law Due
Legal Due Diligence
Diligence
a. Due diligence of various agreements:

Conducted to identify the legal aspects of intra- ● Agreements relating to production, supply and
corporate and inter-corporate transactions, distribution of goods or services.
liabilities, pending suits etc. it also involves ● Agreements with customers and distributors.
verification of following: ● Purchase agreements
1. Copy of Memorandum and Articles of Association ● Agreement with competitor relating to production,
2. Minutes of Board Meeting for the last three years marketing or bidding, price etc.
3. Minutes of all meetings or actions of shareholders ● Technology transfer/technical know-how agreements.
4. Copy of share certificates issued to Key ● Concession agreements
Management Personnel b. Due diligence on dominance and its abuse:
5. Copy of all guarantees to which company is a ● Examination of existence of dominance
party ● Examination of relevant market
6. All material contracts ● Cases of abuse.
7. Copies of all loan agreements, bank financing c. Due diligence on combinations:
agreements, line of credit ● Nature of combination.
to which company is a party ● Acquisition of share, voting rights, assets or control or
8. Status of the order issued by the various merger/amalgamation etc.
regulators and courts ● Examination of total value of Assets or Turnover and the
9. Status of Pending litigations valuation methodology.
● Status of merger notification to be filed with CCI.
● Status of dominance after merger.

Due Diligence for Merger & Amalgamation
DUE DILIGENCE PROCESS IN THE M&A STRATEGY
Stage Preparation by buyer Preparation by seller
● Form strategy for M&A ● Structure a business plan

Preparation Stage ● Prepare list of potential Targets ● Preparation of list of potential
● Appoint external advisor for buyers
evaluation of targets ● Appoint external advisor
● Short list targets ● Shortlist buyers
● Create due diligence team
● Approach targets ● Approach buyers
Pre- Diligence ● Negotiation of initial terms ● Negotiate initial terms
● Execute non-disclosure ● Execution of non disclosure
agreement agreement
● Compilation of list of data ● Creation of data room
required
● Inspection of data room ● Assistance in data room
Due Diligence ● Analysis of private documents ● Setting deadlines for offer
● Evaluation of risk and return
● Structure the terms and
conditions
● Make final offer ● Compile final offers
Negotiations ● Negotiate and agree on terms ● Select best offer
● Negotiations
Post merger integration and cultural Termination of data room and ownership
Post diligence adjustments exchange

Due Diligence for Issue of Securities Due Diligence Report for Bank
The Reserve Bank of India has advised to all

Issue securities to public through prospectus, scheduled commercial banks to obtain a certificate
private placement, right issue or bonus issues. of compliance with applicable rules and regulations,
However, a company which is listed has to abide through a practicing Company Secretary.
with the following regulations of SEBI:
a. The SEBI (Issue of Capital and Disclosure
Requirement), Regulations, 2009/2018.
GUIDANCE ON DILIGENCE REPORTING:
b. The SEBI (Listing Obligation and Disclosure
Requirement) Regulations, 2015.
1. Period of Reporting
SEBI (ICDR) Regulations provides guidelines for 2. Secretary in whole-time practice

Initial Public Offering, Further Public offering,
pricing, conditions governing promoters
contribution, restriction on transferability of 3. Right to Access Records and Methodology for
promoter’s contribution, minimum offer to public Diligence Reporting
etc.
4. Reporting with qualification
It lays down the periodic disclosure to be given by
the listed entities operating in different segments
of capital markets. 5. Professional Responsibility and Penalty for
False Diligence Report
6. Communication to earlier incumbent

FCRA Due Diligence:
 FCRA governs foreign contributions.

 Provides that foreign contributions should not be received in the form
Scope of the Act: of donations, delivery, foreign securities, debentures, bonds, shares, if
value of contribution exceeds US$387 (Rs 25,000), either in Indian
Currency or Foreign Currency.
 Obtain approval from Ministry of Home Affairs under FCRA.

 Either opt for special permission or go for a long-term registration
Registration that is valid for a period of five years.
 In the case of former, approval of Ministry of Home Affairs. In the
case of the latter, apply for renewal, six months prior to the ending
of the registration period.
 Open and maintain bank accounts.

Foreign Funding:  These contributions should be utilised only for the purpose for
which they are received.
Submit annual returns to the federal government within nine months

Due Diligence from the closure of the previous financial year and should include all
the details of the contributions received including:
and Reporting
● Source and manner in which it is received
Requirements:
● Purpose for which it was received and
● Manner of usage of the contributions

NON-DISCLOSURE AGREEMENT
● Ensure confidentiality of information and protect trade secrets.
● The agreement should be confidential and it should be used only for the purpose specified.
It will be considered as breach of agreement if such person gives access to the information to some
other person.

CHAPTER 20
DUE DILIGENCE II

1. Depending on the type of punishment:
On the basis of punishment are classified as following:
● Punishable with only imprisonment
● Punishable with only fine
● Punishable with fine or imprisonment
● Punishable with fine and imprisonment
● Punishable with fine imprisonment or both
NON-
COMPLIANCES
UNDER 2. Depending on Cognizability:
● Cognizable offenses: are those in which police does not
COMPANIES require warrant for arrest. (Bailable)
ACT, 2013 ● Non-Cognizable offenses: are those in which police do
require a warrant for arrest. (Non Bailable)
3. Depending on Bail ability:

Offenses which are Bailable or which require the Judicial
Custody.

DEALING WITH COMPLAINT BY ROC
AND SFIO IN SPECIAL COURT DIFFERENCE BETWEEN FINE AND PENALTY
COMPLAINT BY ROC
 Considered as a private complaint under section

190 of the CrPC, 1973 FINE PENALTY
• Imposed only by a • Imposed even by an
 Has to pass through the process of section 200 NCLT/Court of law
to 203 of CrPC, 1973 administrative office(r).
 The procedure causes delay in the prosecution • Imposed by way of

• Imposition of fine requires adjudication.
initiated by ROC prosecution in a Court of
law
• Penalties are liabilities
• Fines are Punishments.
COMPLAINT BY SFIO • Imposed for Criminal or • Penalty is for civil
quasi Criminal offenses.
 Treated as police report under section 173 of obligations
the CrPC, 1973
 Does not have to pass through the process of

section 200 to 203 of CrPC, 1973
 Directly proceeds to Section 204 and the next

stage of trial that is issuing of summons or
warrants

COMPOUNDING
Essentially a compromise or arrangement between administrator of the enactment and person committing an
offense, to provide some consideration
Non Compoundable Offences

Compoundable Offences
1. Punishable with imprisonment
1. Punishable with fine 2. Punishable with imprisonment and
2. Punishable with fine or fine Any offense for which action is
imprisonment taken under Sec 447, i.e., fraud, is
3. Punishable with fine or non compoundable, as the
imprisonment or both punishment therefore is fine and
imprisonment

ENFORCEMENT MECHANISM OF SEBI
Civil quasi-judicial proceedings
Prosecution (Criminal Proceedings)
Settlement/Compounding
Recovery

HIGHLIGHTS OF SEBI (SETTLEMENT PROCEEDINGS) REGULATIONS, 2018
1. Limitation period for filing a Settlement

Application
5. Constitution of the High-Powered Advisory

Committee (“HPAC”)
2. Settlement applications in case of repetitive

defaults
6. Increase in Indicative Amout for Settlement
3. Increasing the Scope of Settlement
7. Settlement with confidentiality
4. Settlement applied by fugitive economic

offender, willful defaulter etc. may not be
settled

CONTRAVENTION AND
STANDARD OPERATING PROCEDURE
COMPOUNDING UNDER FEMA
REGULATIONS
 Compounding refers to the process of voluntarily

1. Move the scrip of the listed entity
admitting the contravention, pleading guilty and seeking
to “Z” category wherein trades
shall take place on ‘Trade for Trade’ redressal.
basis by following the below
procedure  Any person who contravenes any provision of the FEMA,
1999, except section 3(a), can make an application to
2. Suspend trading in the shares of RBI for compounding
such listed entity by following the
below procedure  One can also make an application for compounding, suo
moto, on becoming aware of the contravention.
listed entity
3. If the non-compliant listed entity
complies with the Requisite requirement  An application for compounding should be accompanied
after the date of suspension and pays by following documents:
the applicable fine, the recognized stock  The application having details of applicant, nature of
exchange shall revoke the suspension of
contravention and facts of the cases.
trading of its shares by following the
 The details of irregularities.
below procedure.
 An undertaking that no order for investigation has been
made against the entity.
 Details of bank account.

Procession of Compounding
Application
Personal Hearing
 Not mandatory to attend.
 In case a person opts not to attend - indicate his
 The Reserve Bank makes a scrutiny of the preference in writing.
application to verify the documents  Does not have any impact on compounding order.
 On the admission, the Reserve Bank examines

and decides if the contravention is Manner of Reporting of Non-Compliance
technical/material/sensitive in nature.  A qualification, reservation or adverse remarks, if
any, should be stated by the Secretarial Auditor at
the relevant places in his report in bold type or in
 If technical - cautionary advice. italics.
 When the professional is not able to express an
opinion on any matter, he should mention that he
 If material - compounded by imposing an is unable to express an opinion on that matter and
amount after giving an opportunity of personal the reasons therefor.
hearing to the contravener.  If due to limitations the work is restricted, then
such limitations should be specified in the report.
 If such limitations are so material that the
 If sensitive in nature requiring further professional is unable to express any opinion, he
investigations - refer to the Directorate of should state that in the absence of necessary
Enforcement (DoE) for further investigation/ information and records, he is unable to report on
action. compliance(s) relating to such areas by the
Company.
 The professional may make a disclaimer of opinion.
Muskan is a graduate from ILS Law College, Pune. She Qualified as a
CS Muskan Gupta Company Secretary at the age of 21 with AIR 15 in Foundation
Programme. She has completed her masters in Psychology and
pursing masters in law from Bhartiya Vidyapeeth, Pune.
She has worked with esteemed lawyers and firms and has always
shown great interest in subjects like Crpc, CPC, Constitution of India
and Corporate Laws. She contributes to the legal fraternity by
running a project called “VAKAALAT” which is a venture to brighten up
the future of students pursuing law.
She has authored and published research papers in the field of

Intellectual Property Rights, Cyber Law, Corporate Laws, etc. She has
an inherent passion for teaching and firmly believes-
“Keep working hard, until you are insanely proud of yourself”
Office 30A, 1st Floor, Gate No. 1, Kumar Prestige Point, Behind BSNL Office, Bajirao Road, Shukrawar Peth, Pune - 411 002
8888 235 235, 8888 545 545, 8888 569 569, 8888 280 280 yesacademypune@gmail.com
yesacademy.co.in /yesacademyforcsandlaw /yesacademyforcsandlaw /yesacademyforcsandlaw

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CS PROFESSIONAL For Dec 23/June 24 Attempt

Company has to comply with a lot of laws rules and

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Compliance Chart: Mentions

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

RATNA AA Compliance policy and

Compliance Chart is an overview of Laws/Rules/Regulations and

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

 Risk Assessment: In the

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Functional Heads will

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Communication, Training, and Implementation: Involves communication of policies

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

A strong Compliance training and education

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

A compliance management programme has following significance:

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Apparent Compliances- Apparent Compliances

Adequate Compliances- is compliance in letters.

Absolute Compliances- are those which are in

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

A. Nature of business B. Geographical domain of C. Jurisdictions in which it

F. Size of the company both in terms of operations as well as investments,

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

‘Compliance Manager’ of the

Has to ensure that Play a proactive advisory role as he

Provide advice on compliance risk,

Business Risk Management

Internal Audit and Financial Succession

Legal Compliance Framework Management Operational Review

Used to store electronic documents, records,

ADVANTAGES OF ELECTRONIC RECORDS DISADVANTAGES OF ELECTRONIC

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Section 120 of the Companies Act, 2013 read with

SNO. Particulars Physical Data Room Virtual Data Room

4. Convenience Searching of documents Multiple buyers can review the

6. Facility to restrict access of Difficult to implement any Access can be restricted.

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Results of reviews: Record of changes made in the agreement

Monitoring of work performance: Monitoring of work performed by the

Information analyses: Making information system of the organization and

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

 Regulation 9-Listed entity shall have a policy

d. Index of debenture holders are to be preserved for 15

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

A. Analysis and Restructuring Existing

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

SCOPE AND IMPORTANCE

1. By Banks: to know the history of the company before

3. By Shareholders: Shareholders can demand

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

State reasons for not Take order from CG

ROC in FORM CHG - 1

If not registered within

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

Procedure for Search Report under IPR Laws is as following:

PROPERTY TITLE SEARCH SEARCH REPORT UNDER SEBI, RBI, STOCK

4. Board Meetings 3. Companies listed under Direct Listing

5. Shareholders Meetings 4. Revocation

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235

CS MUSKAN GUPTA 9532064262 YES ACADEMY, PUNE 8888 235 235