Answer By law4u team
A compliance audit under company law is a systematic examination of a company’s records, operations, and procedures to check whether it is following all applicable legal and regulatory requirements. Under the Companies Act, 2013, compliance audit mainly focuses on verifying whether the company is properly adhering to provisions such as filings with regulatory authorities, maintenance of statutory registers, board procedures, shareholder requirements, and other legal obligations. In simple terms, it is an audit that checks “whether the company is obeying the law”, rather than just checking financial accuracy. This audit is often conducted through a Secretarial Audit, which is mandatory for certain classes of companies (such as listed companies and large public companies) and is carried out by a Practising Company Secretary. The auditor examines whether the company has complied with laws like company law, securities regulations, and other applicable corporate laws. The main purpose of a compliance audit is to ensure legal discipline, transparency, and good corporate governance. It helps detect non-compliance early, reduces the risk of penalties or legal action, and improves investor confidence in the company’s functioning. If any non-compliance is found, it is reported in the audit report, and the company is expected to take corrective action.
