{"id":21860,"date":"2023-04-18T15:44:20","date_gmt":"2023-04-18T10:14:20","guid":{"rendered":"https:\/\/gstguntur.com\/?p=21860"},"modified":"2023-04-18T15:44:20","modified_gmt":"2023-04-18T10:14:20","slug":"secretarial-audit-fraud-detection-and-reporting-cs-professional-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/secretarial-audit-fraud-detection-and-reporting-cs-professional-study-material\/","title":{"rendered":"Secretarial Audit-Fraud Detection and Reporting – CS Professional Study Material"},"content":{"rendered":"

Chapter 16 Secretarial Audit-Fraud Detection and Reporting – Secretarial Audit Compliance Management and Due Diligence ICSI Study Material<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Secretarial Audit-Fraud Detection and Reporting – Secretarial Audit, Compliance Management and Due Diligence Study Material<\/h2>\n

Question 1.
\nAnalyse the differences between the following :
\nFraud and Non-compliance (Dec 2019, 2.5 marks)
\nAnswer:
\nFraud V\/S Non Compliance
\nFraud : As defined in Explanation to Section 447 of the Companies Act, 2013 tthe \u201cfraud\u201d in relation to affairs of a company or anybody corporate, includes any act, omission, concealment of any fact or abuse of position committed by any person or any other person with the connivance in any manner, with intent to deceive, to gain undue advantage from, or to injure the interests of, the company or its shareholders or its Creditors or any other person, whether or not there is any wrongful gain or wrongful loss.
\nIn general the fraud can be defined as act or course of deception, an intentional concealment, omission, or perversion of truth, to<\/p>\n

    \n
  1. gain unlawful or unfair advantage,<\/li>\n
  2. induce another to part with some valuable item or surrender a legal right, or<\/li>\n
  3. inflict injury in some manner.<\/li>\n<\/ol>\n

    Willful fraud is a criminal offense which calls for severe penalties, and its prosecution and punishment. However, incompetence or negligence in managing a business or even a reckless waste of firm’s assets (for example by speculating on the stock market) does not normally constitute a fraud.<\/p>\n

    Non Compliance: The term non-compliance refers to failure to comply with the laws, rules regulations etc. It is commonly used in regard to a failure to meet the compliance requirements or failure to doing compliance be it the failure in following procedures, filing of information, eligibility conditions, reporting etc.
    \nThe relationship between the Fraud and the non-compliance can be constructed as the non-compliance in the company may lead to a fraud however it may also be noted that the fraud can also be made in the compliant company.<\/p>\n

    \"Secretarial<\/p>\n

    Question 2.
    \nIf the amount of a fraud detected by a Secretarial Auditor during the course of his work in a company is \u20b9 50 lakh, explain his duties to report. (June 2019, 3 marks)
    \nAnswer:
    \nReporting of frauds by auditor involving amount less than \u20b9 1 crore:
    \nAs per the Sub-rule (3) of Rule 13 of the Companies (Audit and Auditors) Rules, 2014 in case of fraud involving an amount less than \u20b9 1 Crore, the auditor shall report the matter of fraud to the Audit Committee or to the Board within 2 days of his knowledge of the fraud. The report should specify the nature of the fraud with description, approximate amount of the fraud and parties involved in the fraud.
    \nIn such case, as per Sub-rule (4), the Board shall disclose in its report (Board’s Report) the nature of fraud with description, approximate amount of the fraud, parties involved in the fraud and remedial action taken. Name of parties should be disclosed only when the Board or Audit Committee has not taken any remedial action against the fraud.
    \nIn the given instance, the Secretarial Auditor shall report the same to the Audit Committee or to the Board of the company within 2 days of his knowledge of fraud.<\/p>\n

    Question 3.
    \nA fraud is punishable offence whereas the non-compliance also attracts the penalties. Differentiate between the two concepts i.e. Fraud and Non-Compliance. (June 2019, 5 marks)
    \nAnswer:
    \nAny person who is found to be guilty of fraud shall be punishable with imprisonment and shall also be liable to fine as prescribed under section 447 of the Companies Act, 2013.
    \nThe term fraud can be defined as an act or course of deception, an intentional concealment, omission or perversion of truth, to<\/p>\n