Corporate Accounting and Auditing · Secretarial Audit

Secretarial Standards and Compliance Areas in Secretarial Audit

Updated 10 October 2026 · Fact-checked

A secretarial audit checks whether a company follows the laws that apply to it. The Secretarial Auditor reports on the Companies Act, 2013, its rules, Secretarial Standards SS-1 (Board Meetings) and SS-2 (General Meetings), SEBI laws where applicable, FEMA, and other applicable laws. You answer by naming each area and what is tested.

Understand Secretarial Standards and Compliance Areas

A secretarial audit is a check of a company's compliance with laws, rules, regulations and standards. It is done by a practising Company Secretary. The report tells shareholders whether the board has run the company within the law.

The audit looks at the applicable laws only. What applies depends on the company. A listed company faces SEBI rules. A company with foreign investment faces FEMA. A pharma company faces drug laws. So the first step is always to list which laws apply.

The main areas checked are these:
- The Companies Act, 2013 and the rules made under it.
- The Securities Contracts (Regulation) Act and the Depositories Act, with their rules, where applicable.
- SEBI regulations, such as those on listing obligations and disclosures, insider trading, takeovers and buy-back, for companies they cover.
- FEMA, for foreign direct investment, overseas direct investment and external commercial borrowings.
- Secretarial Standards issued by the ICSI.
- Other laws specific to the industry, such as labour, environment, tax and sector laws.

SS-1 deals with meetings of the Board of Directors. It covers notice, agenda, quorum, minutes and recording of decisions. SS-2 deals with general meetings of shareholders. It covers notice, explanatory statement, voting, proxies, poll and minutes. The Companies Act makes compliance with these standards mandatory for companies.

The auditor checks records such as minute books, registers, statutory filings and returns. The auditor then gives an opinion on whether proper systems exist to ensure compliance. The audit report is a report on compliance. It is not an opinion on the true and fair view of the accounts.

Key rules to remember

SS-1: SS-1 = Secretarial Standard on Meetings of the Board of Directors; Covers notice, agenda, quorum, conduct and minutes of board meetings and committee meetings.
SS-2: SS-2 = Secretarial Standard on General Meetings; Covers notice, explanatory statement, proxies, voting, poll and minutes of general meetings.
Issuing body: Secretarial Standards are issued by the ICSI; They are made under the Companies Act and compliance is mandatory for companies.
Laws in scope: Companies Act + SEBI laws + FEMA + other applicable laws; The report covers the laws applicable to the company, not every law in India.
Nature of report: Secretarial audit = compliance opinion, not a true and fair view; It does not replace the statutory financial audit.

How to solve Secretarial Standards and Compliance Areas questions

Use this method for any question on laws, standards or compliance areas in a secretarial audit.

1Read the question and note the type of company: listed, unlisted, with foreign investment, or in a regulated sector.
2List the laws that apply to that company. Start with the Companies Act, 2013.
3Add SEBI regulations only if the company is listed or has securities covered by them.
4Add FEMA only if there is foreign investment, overseas investment or foreign borrowing.
5Link each law to what the auditor checks, such as minutes, registers, filings or disclosures.
6Bring in SS-1 for board meetings and SS-2 for general meetings where meetings are mentioned.
7State the conclusion: whether there are systems to ensure compliance, and the type of reporting that follows.

Quickest way: Law-to-check pairing

When to use it: Use this for short notes, MCQs and 'which laws are covered' questions.

Write the five headings: Companies Act, SEBI, FEMA, Secretarial Standards, Other laws.
Next to each, write one thing the auditor checks, such as minutes, listing disclosures, foreign investment filings.
Match SS-1 with the Board and SS-2 with shareholders.
Check whether the facts make a law applicable before including it.

Common mistakes in Secretarial Standards and Compliance Areas

Swapping SS-1 and SS-2
Both are numbered standards on meetings and look alike.
Fix: Remember 1 for the Board and 2 for the general meeting of members.
Saying the secretarial audit covers all laws in India
Students assume a compliance audit is unlimited.
Fix: State that it covers laws applicable to the company, including industry-specific laws.
Treating the report as an opinion on financial statements
It is confused with the statutory audit.
Fix: Say it is a compliance report. Financial statements are covered by the statutory audit.
Applying SEBI rules to every company
Students forget that SEBI regulations depend on listing and securities.
Fix: Add SEBI laws only when the company's securities or listing bring it under them.
Leaving out FEMA in cases with foreign money
Focus stays on the Companies Act.
Fix: When the question mentions foreign investment or overseas borrowing, name FEMA and its related filings.

Worked examples

Example 1

List the laws and standards a secretarial auditor would examine for Bharat Textiles Ltd, a listed company that has received foreign direct investment and has factories in several states.

Show the solution

The company is listed, so SEBI regulations apply, such as listing obligations, disclosure and insider trading rules.
It is a company, so the Companies Act, 2013 and its rules apply.
It has received foreign direct investment, so FEMA applies, along with its reporting requirements.
Board meetings and general meetings are held, so SS-1 and SS-2 apply.
It has factories, so industry laws such as labour and environment laws are other applicable laws.

Answer: The auditor examines the Companies Act, 2013 and rules; SEBI regulations as a listed company; FEMA for foreign direct investment; SS-1 and SS-2; and other applicable laws such as labour and environment laws.

Example 2

Write a short note on Secretarial Standards SS-1 and SS-2 and explain why the secretarial auditor checks them.

Show the solution

State what they are: standards issued by the ICSI on meeting procedures.
SS-1 covers board meetings: notice, agenda, quorum, conduct and minutes.
SS-2 covers general meetings: notice, explanatory statement, proxies, voting and minutes.
Explain the link to the audit: the Companies Act requires companies to follow them, so non-compliance is a compliance gap.
The auditor checks them by inspecting notices, attendance records and minute books.

Answer: SS-1 governs Board meetings and SS-2 governs general meetings. The auditor checks them because compliance is mandatory, and reports gaps found in notices, quorum, voting and minutes.

Exam tips

For MCQs, remember SS-1 is for the Board and SS-2 is for general meetings.
In a long answer, use headings: Companies Act, SEBI, FEMA, Secretarial Standards, Other laws. This gives clear step marks.
Always check from the facts which laws apply before listing them.
Use the phrase 'applicable laws'. Do not claim the audit covers everything.
Add one line on what the auditor checks, such as minutes and filings.

Practice questions from Secretarial Audit

Secretarial Standards and Compliance Areas in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Secretarial Standards and Compliance Areas: frequently asked questions

What are SS-1 and SS-2?

SS-1 is the Secretarial Standard on Board meetings and SS-2 is the Secretarial Standard on general meetings. They are issued by the ICSI. Companies must follow them.

Which laws does a secretarial audit cover?

It covers the Companies Act, 2013 and its rules, SEBI regulations and related securities laws where applicable, FEMA, Secretarial Standards and other laws applicable to the company.

Is FEMA checked in every secretarial audit?

No. FEMA is checked where it applies, mainly for foreign direct investment, overseas direct investment and external commercial borrowings.

Is a secretarial audit the same as a statutory audit?

No. A secretarial audit reports on legal and procedural compliance. A statutory audit gives an opinion on the financial statements.