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CMA Intermediate · Corporate Accounting and Auditing · Secretarial Audit

The secretarial auditor's report on a listed company contains a qualification about delayed filing of a statutory return. What does section 204(3) require of the Board of Directors?

The Board must explain in full, in its own report under section 134(3), any qualification, observation or other remark made by the secretarial auditor. Section 204(3) imposes this duty, so the remark cannot be suppressed or limited to the Audit Committee.

  1. AExplain in full the qualification or observation in the Board's reportCorrect
  2. BRemove the qualification by asking the auditor to revise the report
  3. CDisclose the qualification only to the Audit Committee
  4. DReport it to the Central Government within thirty days

Explanation

Section 204(3) says the Board, in its report under section 134(3), shall explain in full any qualification, observation or other remark made by the company secretary in practice. The Board has no power to have the remark removed, and the section does not confine the disclosure to the Audit Committee. No thirty-day reporting to the Government is mentioned in section 204.

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