A company’s auditor is required to report on the accounts of branch office, if the same have been audited by a person other than the company’s auditor, according to section 227(3)(bb) of Companies Act, 1956. The section requires the company’s auditor to state in the auditor report on whether the branch office auditor has forwarded audit report on the accounts of the branch office and how the same has been dealt by the company’s auditor in preparing his audit report. 
Further, Standards of Auditing (SA) 700 is required to be followed by the auditors, which deals with “FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS”. Appendix of SA 700 prescribes “Formats of Auditors’ Reports on Financial Statements”, whereby the requirement under Section 227(3)(bb) was missing. Now SA 700 has been revised to be in-sync with the section. The comparison of the Auditor’s Report is shown below. The insertion is marked in bold.
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SA 700 |
Revised SA 700 |
| As required by section 227(3) of the Act, we report that:b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those booksc. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account | As required by section 227(3) of the Act, we report that:b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by usc. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us |
Disclaimer : This is not a legal opinion and should not be construed as one. Please speak with your attorney for any advice.
