Page 270 - CA Inter Audit PARAM

CA Ravi Taori
It is provided that the branch auditor shall prepare a report on the accounts of the branch
examined by him and send it to the auditor of the company who shall deal with it in his
report in such manner as he considers necessary.

➢ Rule 12 of the Companies (Audit and Auditors) Rules, 2014,
Further as per rule 12 of the Companies (Audit and Auditors) Rules, 2014, the branch
auditor shall submit his report to the company’s auditor and reporting of fraud by the
auditor shall also extend to such branch auditor to the extent it relates to the concerned
branch.

➢ Section 139(1) of the Companies Act, 2013 provides that
Every company shall, at the first annual general meeting appoint an individual or a firm as
an auditor who shall hold office from the conclusion of that meeting till the conclusion of its
sixth annual general meeting and thereafter till the conclusion of every sixth meeting

Part III – Case Discussion
➢ In the present case, the board has appointed branch auditors. The board had appointed the
auditor where it did not have authority to do so.
Part IV – Conclusion
As such, the appointment is invalid. The shareholder’s complaint is right. The branch auditor should
ascertain before accepting the audit whether his appointment is valid

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