Skip to content

CS Professional · Compliance Management, Audit and Due Diligence · Secretarial Audit

The secretarial audit report of Bharat Agro Ltd, a listed company, contains an observation that two Board meetings were held with delayed notice. The Managing Director proposes to omit any comment in the Board's report, saying that the observation is the auditor's matter alone. What does section 204(3) require?

The Board must explain in full, in its section 134(3) report, any qualification, observation or other remark made by the secretary-auditor. Merely mentioning it or staying silent breaches section 204(3); the duty lies on the Board, not on the auditor.

  1. AThe Board must explain in full the qualification or observation in its report under section 134(3)Correct
  2. BThe Board need only mention the observation without explaining it
  3. CThe company secretary in practice must explain the observation in the Board's report
  4. DThe Board may ignore the observation if no penalty has been imposed

Explanation

Section 204(3) requires the Board of Directors, in its report under section 134(3), to explain in full any qualification, observation or other remarks made by the company secretary in practice. A bare mention is insufficient, and the duty does not depend on any penalty. It rests on the Board, not the auditor.

Did you get it right without looking?

One question tells you little. A timed set on Secretarial Audit shows your real accuracy, how long you take and where you lose marks.

Practise Secretarial AuditFree diagnostic mock

More Secretarial Audit questions