Company Secretary as a Forensic Auditor

The Company Secretary plays a crucial role in the corporate governance as the guardian of compliance and transparency. However, in present times, the obligations of a Company secretary have surpassed conventional boundaries, extending into the forensic auditing. This converging role has emerged as a dynamic react to the complex and risks within the business environment. Forensic Auditing is exclusive domain of relevant professionals, is now finding a seamless integration with the Company Secretary’s set skills. The current article provides the Company Secretary as a Forensic Auditor & Forensic Audit under Companies Act, 2013.

Explain Forensic Audit under Companies Act, 2013?

Forensic Audit under Companies Act, 2013 has not clearly mentioned about it. In general, it is an analysis and evaluation of financial detail with the particular goal of uncovering evidence for regulatory and legal proceedings. It is not like a traditional financial audit that focuses on about the accuracy and compliance with accounting standards. Here are certain sections and provisions of shareholders’ interests:

• Books of Account: As per section 128 of the companies act, 2013 provides that the company need to do statutory audit report, to maintain books of accounts, and other appropriate financial documents. 
• Financial statement: The provision of section 129 of the Companies Act, 2013 provides the companies are needed to prepare and present their financial statements, such as profit and loss account, balance sheet, and other documents at the annual general meeting. 
• Investigation by Serious Fraud Investigation Office (SFIO): The SFIO has been set up under this section to investigate serious frauds. It has power to do inquiries into the company’s affairs. It is stated under section 211 of the Companies Act, 2013.
• Investigation into affairs of company by Central government: The central government may pass the order for an investigation on a report of company’s shareholder or registrars. On the company’s present affairs if it believes it is significant for public interest or interest of company’s stakeholders. The provision is given under section 212 of the Companies Act, 2013.
• Powers and duties of auditors and auditing standards: The Company secretary is managing the corporate frauds. The corporate frauds and financial scams have been occurred in India, and these required the attention of the legislation. It is necessary to examine high standards in corporate governance and execute stringent provisions to handle corporate fraud. The section 143 of the Companies Act, 2013 are provided the auditors have particular duties and powers related to such frauds and non-compliance with laws.
• Power to call for information: The section 206 of the Companies Act, 2013 provides the power to Registrar of Companies (RoC) to call for details, initiate investigations into the affairs company, and do inspections.
• Punishment for fraud: Section 447 of the Companies Act, 2013 is provided provisions about the penalties and imprisonment in the fraud matter. In case any individual is identified as guilty of fraudulently inducing someone to invest or deal with company as they can face huge consequences.  

Importance of Company Secretary

Role of Company Secretary as a Forensic Auditor

The role of Company Secretary as a Forensic Auditor:

• Investigation on criminal matters: A Company Secretary must have used his investigation accounting skills to evaluate the documentary and other evidence to provide their expertise opinion on the matter. 
• Fraud Investigations: Company secretary should be called upon to assist in an investigation business that can be involved in asset identification and recovery, review of due diligence, funds tracking, and forensic intelligence gathering. During the fraud perpetrated by an employee, there is requirement of forensic auditors to provide their expertise opinion regarding the nature and fraud extent. 
• Claims regarding personal injury: Where losses increase as an outcome of personal injury, insurance companies look specialized or professional opinion from a forensic auditor before deciding whether the claim is right and how much need to pay.

• Professional negligence: The forensic auditor should be approached in professional negligence case to investigate whether professional negligence has considered and to quantify the loss that has outcome from the negligence. In case any such case has taken place where dispute arises in between to professional and their client. 

• Inspection and investigation: Company Secretary may help the ACB, Police, and other investigating authorities in gathering evidence and for other investigation purposes. For instance, as per section 447 of the Companies Act, 2013 where the police and court may need the forensic auditor’s skills while inspecting any books in so far as about the accounts of an accused. 

• Adaptability to changing regulatory landscapes: Company secretary as forensic auditors need to be updated regarding changes in regulations. This adaptability is significant for exploring evolving regulatory landscape. 

• Effective communication: Company secretaries are skilled communicators, and in role forensic auditor, the communication is the key in term of finance excel at conveying financial detail to shareholders. The CS can communicate in easy and concise manner.

• Promotion of ethical conduct: The Company Secretaries is as guardians of corporate ethics, which play a crucial role in promoting ethical conduct within the company.

• Enhancement of corporate governance: The CS is integration as a forensic auditor develops corporate governance by combining administrative proficiency with investigative skills.

Appointment and removal of a Company Secretary

Value driven services by practicing Company Secretary

There are value driven services by practicing company secretary are:

• Companies Act, 2013;
• Financial markets;
• Management of risk and compliance;
• Due diligence and reporting;
• Appearances and pleadings before courts and tribunals;
• Audit including forensic audit, internal audit, and secretarial audit;
• Corporate Governance.

Conclusion

In conclusion, the fusion of the Company Secretary and forensic auditor roles presents an example shift in how company explore issues and their solution of integrity. From the information of above article, it is quite evident that the Company Secretary, traditional compliance has become significant in the prevention of financial irregularities and proactive detection. The expansion of Company Secretaries responsibilities as forensic auditors underscores the requirement of comprehensive skill set that goes beyond administrative duties.