Secretarial audit under section 204 of the Companies Act, performed by a company secretary in practice and reported in the prescribed Form MR-3, tests compliance with a defined set of laws applicable to the company, including the Companies Act, SEBI regulations for listed companies, and other specifically applicable laws, while a statutory audit under section 143 expresses an opinion on whether the financial statements give a true and fair view; the two overlap specifically on governance and procedural compliance matters disclosed in or affecting the financial statements, such as related-party approvals, board composition and CSR compliance, but a statutory auditor does not rely on a secretarial audit report as audit evidence for the financial statement opinion without independently assessing it, and the exact scope and applicability thresholds for secretarial audit should be confirmed against the current Act.
What secretarial audit covers that statutory audit does not
- Compliance with the Depositories Act and related SEBI regulations for dematerialisation of shares.
- Compliance with the SEBI takeover code, insider trading regulations and other listing regulations, for listed companies.
- Adherence to secretarial standards issued by the Institute of Company Secretaries of India on board and general meetings.
- Compliance with specifically applicable industry laws, which the practising company secretary identifies and lists specifically for that company's sector.
Where the two genuinely overlap
| Area | Secretarial audit tests | Statutory audit tests |
|---|---|---|
| Related-party transactions | Procedural compliance: board and shareholder approval process, disclosure in the register | Financial statement impact: measurement, disclosure accuracy, arm's-length pricing where relevant |
| CSR compliance | Procedural compliance: committee constitution, policy approval, action plan | Financial impact: obligation computation accuracy, unspent amount transfer, CARO reporting |
| Board and committee composition | Whether composition meets statutory requirements at each point in the year | Whether this affects internal control reliance or disclosure in the financial statements |
| Loans, investments and guarantees under sections 185/186 | Procedural compliance: approvals obtained, filings made | Financial statement impact: classification, disclosure, CARO clause 3(iv) reporting |
Using secretarial audit findings in the statutory audit
- 01Obtain the secretarial audit report and read it alongside the board's responseQualifications or observations in Form MR-3, and the board's explanation for each, are relevant audit evidence on the control environment and compliance culture, read as a corroborating input rather than a substitute for the statutory auditor's own testing.
- 02Cross-check specific findings against financial statement assertionsA secretarial audit observation on a related-party approval not obtained in time has a direct bearing on whether that transaction's disclosure and the CARO related-party clause are correctly stated; follow each relevant finding through to the statutory audit's own conclusion.
- 03Do not extend reliance beyond the secretarial auditor's actual scopeSecretarial audit does not test the arithmetic accuracy of financial disclosures or the recoverability of related-party balances; a clean MR-3 report is not evidence on those financial statement assertions.
How we think about this
The two audits are complementary rather than overlapping in the sense of one replacing the other's work. Reading the secretarial audit report is cheap and often surfaces a governance issue worth following into the financial statements before it becomes a bigger finding later in the engagement.
Regulatory requirement
The exact applicability thresholds for secretarial audit under section 204, the prescribed Form MR-3, and the specific laws it covers for a given company are set out in the Companies Act and SEBI regulations as currently in force. Confirm all of these against current source material.
This is practical guidance written for audit teams, not an authoritative statement of any standard or statute. Standards, forms and timelines change. Check the current text issued by the ICAI and the relevant authority before relying on anything here in an audit file.
Related resources
- Internal audit & IFCInternal audit vs statutory audit: what actually differsWhere internal audit and statutory audit genuinely differ — objective, reporting line, independence, and timing — and where coordinating the two saves real work on both sides.
- CARO & Companies ActSecretarial compliance checklist for a statutory auditorBoard meeting frequency, statutory registers and ROC filing timeliness, read as evidence of compliance culture rather than a secretarial checklist in its own right.
- CARO & Companies ActCARO 2020 reporting checklist for statutory auditorsThe topic areas CARO reporting covers, what evidence each one needs, and how the clauses fit together across the audit file.
- Audit workflow & automationSA 250: consideration of laws and regulations, and why direct vs. indirect mattersThe auditor is not a compliance officer. SA 250 draws a specific line around what they're actually responsible for noticing.
Free tools, no signup
Each one reads a file entirely in your browser — or, for two of them, just answers a few questions — and nothing is ever uploaded.
- Purchase register checkDuplicate payments, round-sum amounts, weekend-dated invoices, incomplete records.
- GSTR-2B reconcilerMatches your purchase register against GSTR-2B — missing invoices either side, amount mismatches.
- Bank reconciliation checkerMatches your cash book against a bank statement — what's outstanding on each side.
- Fixed asset register checkDuplicate asset codes, missing location or useful life, negative net book value.
- Payroll red-flag scannerBank accounts shared across employees, and records missing an ID, PAN or salary.
- CARO applicability checkerAnswer a few questions about the company and see which CARO 2020 clauses likely apply.
- MSME payment delay checkerMSME-flagged invoices paid — or still unpaid — beyond the 45-day Section 22 limit.
- Related-party transaction screenerTransactions above a threshold you set with no approval reference, grouped by counterparty.
- Depreciation useful life checkerCompares a useful life in use against the Schedule II, Part C indicative figure.
- Materiality calculatorOverall and performance materiality against PBT, revenue, assets or equity, with reasoning shown.
- Sample size calculatorStatistical sample size for a test of controls or a substantive test of detail.