CS Professional June 2026 Question Paper Compliance Management, Audit and Due Diligence

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2026
Question Paper ·
Compliance
Management, Audit
and Due Diligence
EXAM YEAR TYPE

CS Professional 2026 Question Paper
SUBJECT DATE

Compliance Management, Audit and Due Diligence June 2026

Notes · Sample Papers · Previous Year Papers · Mock Tests

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Roll No. ..................................... :1:

Time allowed : 3 hours Maximum marks : 100

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Total number of questions : 6 Total number of printed pages : 12

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NOTE : Answer ALL Questions.

PART–I

1. (a) Sharad Dhagge and Shailesh Jhawar are partners in the DJ and Company (Company
Secretarial firm). They have got the Secretarial Audit assignment of MNL Limited,

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a manufacturing company. Abhilash (Trainee) was appointed for this assignment. Abhilash

em in detail and reported all area under the audit
has been busy with his studies since his examination were approaching and hence,

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he has not studied the documents
to be in order. However, g
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compliances and statements were not correctly maintained by the company. Based
on the Abhilash’s inputs and without even cross checking the documents, Shailesh
Jhawar PCS signed and certified the Secretarial Audit Report of MNL Limited.

Analyze and decide based on thc Code of Conduct of ICSI, whether the act of

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Shailesh Jhawar is appropriate.

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PQR Ltd., a growing company, has recently expanded its operations. increasing its

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turnover from ` 500 crore to ` 750 crore, and in thc process of commencing a

a new business division. During the year, 3 (three) nos of new laws became applicable,
existing legal provisions were re-interpreted by regulators, and judicial developments
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widened the liability of directors and officers. An internal review identified 8 (eight)
potential areas of non-compliance out of 20 (twenty) applicable laws, with possible
penalties ranging from ` 10 lakh to ` 1 crore, risk of potential operational disruption,
and potential reputational damage due to adverse media reporting. In view of these
developments and increased stakeholder expectations, the Board has directed the
compliance officer to conduct a fresh risk assessment in alignment with the revised
business profile.

In the light of the above case, identify the types of risks that should be included
in the risk assessment process of PQR Ltd., and explain while identifying inherent
risks how the risks drivers could be categorised into legal, financial, business and
reputational effects.

(5 Marks)

(c) Sai Tech Ltd. had implemented a digital document management system for maintaining
statutory registers, contracts, and financial statements. During scrutiny under Section
128 and Section 206, it was observed that, file coding and nomenclature included
multiple special characters such as ampersands brackets, slashes, commas and percentage
symbols in file names. Due to incompatible naming conventions across servers, as
a result, several files could not be sorted chronologically, certain backups failed validation,
and search results generated incomplete outputs. The authority concluded that careless
use of punctuation and special characters in coding created ambiguity and operational
risk, thereby amounting to defective maintenance of books and rccords, reinforcing
the principle that standardized and symbol free nomenclature is a compliance requirement
and not merely an administrative preference. Do you agree with this, suggest them
the best practices for file-naming ?

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(d) You are the Practicing Company Secretary. You have to advise your audit team regarding

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provision related to Companies Act, 2013 in relation to the Board meeting and its

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notice related to the board meeting. Answer each of the following questions as per

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provisions of the Companies Act, 2013 :

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ag (ii)
(i) Board meetings of a Limited Company.

Board meetings of a Specified IFSC Private Company.

(iii) Board meetings of a Dormant Company.

(iv) Notice of Appointment of Auditor to Registrar.

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(v) Notice of the Board meetings at a shorter notice.

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(5 Marks)

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Attempt all parts of either Q. No. 2 or Q. No. 2A

2. (a) Provision of Companies Act, 2013 states that Company has to inform within 30 days

after the date of Incorporation and shall submit in Form INC-22 to Registrar of

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Companies whenever there is a change in registered office. Using the judicial
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the consequences of non-filing of Form INC 22 with ROC.

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(b) Answer each of the following :

(i) UDIN Guideline, mandatory indication of UDIN and consequences of violation

(ii) If a Certificate is signed on September 28, 2019, indicate the date UDIN
may be generated ideally as well as in exceptional cases.

(3+2=5 Marks)

(c) ‘‘The Companies Act, 2013 casts immense responsibility on the Company Secretaries
being the professionals certifying the critical document of Annual Return. Any failure
or lapse on the part of PCS may attract penalty both under the Companies
Act, 2013 as well as under the Company Secretaries Act, 1980 for professional or
other misconduct.’’ You are a Company Secretary in whole time practice and have
the assignment to certify the Annual Return of TKJ Ltd.

In this regard, citing the relevant provisions, inform :

– the threshold limits of Annual Return Certification for TKJ Limited

– applicable e-form for the certification of annual return for TKJ Ltd

– assuming if TKJ Ltd is a small company, what should be the applicable
e-form

– which documents must be examined by the PCS for checking of annual return
certification ?

(5 Marks)

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(d) A large corporate fraud was detected in a company BNT Ltd. involving manipulation
of financial statements and diversion of funds. The matter was investigated by the

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Serious Fraud Investigation Officer (SFIO) under the Companies Act, 2013. After

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investigation, SFIO filed a complaint before the Special Court constituted under Section

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436. The accused argued that the Special Court could not take cognizance directly

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and that the matter should first be committed by a Magistrate.
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offences under the Companies Act, 2013 without committal by a Magistrate. Specify
the offences triable by special courts under Section 436.

(5 Marks)

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OR (Alternate Question to Q. No. 2)

m. return and certain statutory forms within the
s e Act, 20l3. The Registrar of Companies issued
2A. (i) Ansh Limited failed to file its annual

g la would be adjudicated by an Adjudicating Officer, who
prescribed time under the Companies

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a notice stating that the matter
may impose a monetary penalty for the default. The directors of the company argued
that any offence under the Companies Act, 2013 should be tried only by a court
and not by an administrative officer.

With respect to above facts :

(i) Discuss the concept of adjudication of offences.
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(ii) Explain the genesis of the adjudication mechanism under

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Act, 2013.

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(iii) justified.

(5 Marks)

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(ii) Wealth Ltd. is a listed company having 1,200 shareholders and debenture holders.

The company has traditionally maintained its statutory registers and records in physical

form at its registered office. In April 2025, the Board of Directors of Wealth Ltd.

proposed to shift the maintenance of all statutory registers, records and documents

to electronic form in order to improve efficiency and ensure easier retrieval of information.

However, one of the directors raised a concern that the Companies Act, 2013 requires

certain records to be maintained physically and therefore questioned whether the company

could legally maintain such records in electronic form.

The Company Secretary of Wealth Ltd. referred to Section 120 of the Companies

Act, 2013 read with Rule 27 of the Companies (Management and Administration)

Rules, 2014, which permits maintenance of records in electronic form subject to certain

conditions.

Stating the provision, specify whether Wealth Ltd. can maintain its statutory records

in electronic form. Elucidate the manner in which a company can maintain its records

in electronic form in accordance with Rule 27.

(iii) A group of young Agrotech innovators, calling themselves ‘Innovate Aggro’, decided

to build a digital platform to link small farmers from little towns with buyers across

India. They faced the usual hurdles like burdensome paperwork and uncertainty about

government benefits. But India’s recent startup reforms helped turn their idea into a

formal business.

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In the context of the Government of India’s ongoing efforts to encourage entrepreneurship
and innovation, particularly by simplifying and facilitating the registration of start-ups

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across the country, including small and medium cities, list out any five specific

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initiatives/measures which have been introduced recently to reduce procedural hurdles

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by Government to simplify and facilitate the registration of start-ups, including small
and medium cities as per notification dated August 19, 2025 and make theaprocess
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(iv) Explain the Compounding Authorities for Compounding of offences under section 441
of the Companies Act, 2013. Differentiate between Compoundable and Non-

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Compoundable Offences.

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3. (a) CS Anupam Gupta worked as Chief Compliance Officer (CCO) with PQR Limited
till 31/08/2024. Since he got lucrative offer from XYZ Limited, he could not resist
and joined on 1/09/2024 as CCO there. Because of differences of opinion with
management, he had to leave that organisation on 31/10/2025. Post this incidence,
he was in dilemma and searching for a suitable opportunity.

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In the meantime, his friend informed him about an opening with ABC & Company,

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(Company Secrctarial Firm) where he applied and joined with effect from 01/02/2026.

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the firm for FY 2026-27 of MNC limited which is a
Because of his contacts, he was able to secure a secretarial

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where he already worked as CCO.

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Analyse and dccide whether ABC & Company should take up the Secretarial Audit
Assignment for the FY 2026-27 ?

(5 Marks)

(b) ‘‘Different projects undertaken by Social Enterprises may involve varied social issues
and challenges. In such circumstances, the Social Auditor is required to exercise technical
judgment in determining the issues that should be subject to inquiry, while also addressing
certain minimum mandatory issues.’’

Explain how addressing these minimum issues during a Social Audit helps in assessing
the extent of the social impact, identifying potential social obstacles, and anticipating
adverse social effects, thereby enabling measures to avoid, minimize, or offset such
effects.

(c) You have been appointed as the Secretarial Auditor of Alpha Beta Limited. State
what are the preconditions for accepting professional assignment which has to be
mandatorily checked by the Auditor ?

(5 Marks)

4. (a) To simplify corporate restructuring and reduce procedural delays, the Government
amended the Companies (Compromises, Arrangements and Amalgamations) Rules 2016
via notification dated on 4th September, 2025. Analyse the amendments made and
explain which additional categories of companies which are now eligible to undertake
mergers or demergers through the fast-track procedure under Rule 25.

(3 marks)

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(b) While performing substantive testing during the audit of a company’s financial statements,
an auditor may discover certain errors or misstatements in the financial records or

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supporting documents. In such circumstances, the auditor may require additional audit

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procedures to be performed and may communicate the observations through a management

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letter addressed to the management and the Audit Committee. With reference to the
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provisions of the Companies Act, 2013, explain the reasons why errors or misstatements
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(3 marks)

(c) During the course of an audit, the auditor is required to assess the risks associated
with the company’s operations and identify critical and high-risk areas to ensure effective
audit planning. Explain how an auditor can carry out risk assessment and identify

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critical and high-risk areas during the audit proccss.

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(3 marks)

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g adherence to various statutory and other regulatory
(d) The Quality Review is focused towards evaluation and review of quality of services
rendered by membersaand
requirements.

Explain how the appointment of Quality Reviewer is done ?

(3 marks)

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(e) The Council of the Institute of Company Secretaries of India (ICSI) has approved

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. to promote best
the issuance of four ICSI Auditing Standards. The Standards are required to be observed

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e Explain any three
auditing practices, uniformity and consistency while conductingsaudits.
by the Company Secretaries undertaking Audits. The Standards seek

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of them.

(3 marks)

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5. (a) ‘The Audit Documents shall contain sufficient information to enable an Auditor, having
no previous connection with the audit, to ascertain from such documents the significant
findings and conclusions of the Auditor. Audit documents should be comprehensive,
understandable with ease and contain all the significant information related to the scope
covered under the audit.’

Do you agree with the above statement and discuss why the documentation is important ?

(5 Marks)

(b) Quality Review is an engagement that needs to be carried out in a manner that ensures
that the work performed by the Quality Reviewer and the review team meets the
professional standards established by ICSI. A well-planned review engagement ensures
that a review is performed in an effective manner.

Explain how the planning in Quality Review should take place ? What aspects Reviewer
should consider while framing overall review strategy ?

(c) Labour Law Audit envisages a systematic scrutiny of records prescribed under labour
legislations by a professional like Company Secretary, who shall report to the compliance
and non-compliance/extent of compliance and conditions of labour in the Indian Industry/
Business and in any commercial establishments.

As Secretarial Auditor of the company, state the important points you will take care
while doing this Audit under Payment of Bonus Act, 1965.

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Attempt all parts of either Q. No. 6 or Q No. 6A

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6. (a) Auditors use various Audit techniques to obtain sufficient and appropriate audit evidence.

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Mention

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(b) You are partner in CPA & Co (Company Secretarial Firm). Firm has got assignment

from MNP Bank regarding the due diligence of ABC Ltd.

Your senior partner has guided you that

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‘‘While the RBI Notification has opened up a significant area of practice for Company

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whereby they have to justifyas
Secretaries, it equally casts immense responsibility on them and poses a greater challenge

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fully the faith and confidence reposed by the banking

industry and measure up

What is the meaning of this statement and what methodology should be adopted by

you for doing Bank due diligence ?

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(c) Fraud detection and reporting requires the practicing Company Secretaries to focus

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beyond compliance. Discuss the statement and differentiate between Fraud v/s

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Non-compliance.

a (5 marks)

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OR (Alternate Question to Q. No. 6)

6A. (i) Internal auditors of NPD Ltd. have completed the internal audit of manufacturing division
of the company and now have to communicate in writing the audit engagement result
to the management.

What are the objectives of issuing Internal Audit Reports ?

State basic steps of the Audit Report.

(ii) Forming of Opinion based on the audit observations is an important part of any audit,
as through this process, the outcome of audit is presented in the form of Audit Report
to the intended users. Audit inter alia involves reporting compliance of or deviations
from the applicable laws.

How shall the Auditor consider the materiality while forming his opinion ?

(iii) The main objective of appraisal of management decision is to see how decisions are
taken by the Management. Discuss the steps in appraisal of Management Decision.

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