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CS Professional · Compliance Management, Audit and Due Diligence · Concepts of Various Audits

Mehta Pharma Ltd, a listed company, is preparing its secretarial audit for FY 2025-26. The auditor wants to verify compliance with laws specifically applicable to the pharmaceutical industry. Which statement correctly describes the scope of the secretarial audit?

The scope covers the Companies Act, SEBI laws, FEMA where applicable, Secretarial Standards and other laws specifically applicable to the company, such as pharmaceutical regulations. It is wider than the Companies Act alone and does not assess financial statement accuracy, which is the statutory auditor's role.

  1. AIt is limited to the Companies Act, 2013 only
  2. BIt covers the Companies Act, SEBI laws, FEMA to the extent applicable, and other sector-specific laws applicable to the companyCorrect
  3. CIt covers only direct and indirect tax laws
  4. DIt covers only the accuracy of financial statements

Explanation

The secretarial audit checks compliance with the Companies Act and rules, Securities Contracts Regulation Act, Depositories Act, SEBI regulations, FEMA to the extent applicable, and other laws specifically applicable to the company, plus Secretarial Standards. It is not confined to the Companies Act, nor is it a financial statement audit.

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