Audit and Auditors under Companies Act

Branch Audit

Audit refers to inspection and examination of books of accounts of any organization, entity or company. Branch Audit refers to the investigation of the affairs of the branch of any organization, entity or company. The company helps in branch audit by investing its effort to maintain proper books.

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Branch Audit

As per the Companies Act, 2013 every Registered Company has to maintain the books of accounts and other relevant documents for its every branch, in addition to the books of accounts of its Head Office.

The Books of accounts, documents and other relevant documents shall be maintained in the same manner as of the head office for every financial year which gives a true and fair view of the state of the affairs of the company.

Such Books of accounts shall be audited either by the Company Auditor or the Company may appoint a separate auditor to this effect and such auditor shall be called Branch Auditor.

What is Branch Office?

Section 2 subsection 14 of the Companies Act, 2013 defines a branch office. As per the section “branch office”, in relation to a company, means any establishment described as such by the company.

Process for Appointment of Branch Auditor 

There shall be no separate procedure for appointment of the branch auditor. The Process shall be the same as applicable for the appointment of the Statutory Auditor of the company.

Provisions relating to Branch Audit

As per Section 143(8): Where a company has one or more branch office, the accounts of that office/offices shall be audited either by the company’s auditor himself or by any other person, who is qualified to be appointed as an auditor as per the provisions of the Act to act as branch auditor according to section 139 of the Companies Act, 2013.

branch audit


 Branch Situated outside India 

Where the branch office of the Company is situated in a country outside India, the accounts of the branch office shall be audited either by the company’s auditor or by an accountant or by any other person duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country.

The duties and powers of the company’s auditor in relation to the audit of the branch and also the branch auditor, if any, shall be such as may be prescribed.

Duties and Powers of Branch Auditor 

Section 143(1) to Section 143(4) and Rule 12 of the Companies (Audit and Auditors) Rules, 2014 define the Powers and Duties of the Branch Auditor.

The Powers of the Branch Auditor shall be as defined as per subsection (1) to Subsection (4) of section 143 i.e. he shall have right of access at all times to books of accounts, Vouchers, and other relevant documents, whether kept at the branch office or elsewhere.

Further, such the provisions of sub-section (12) of section 143 read with rule 12 hereunder regarding reporting of fraud by the auditor shall also extend to such branch auditor as far as it relates to the concerned branch.

Learn more about Power and Duties of Auditors here in detail.

Solved Example For You

What Shall be the duties of the Branch Auditor?

Duties of Branch Auditor are:

If the Auditor of a Branch of the Company is other than the Company auditor, the duty of Branch Auditor shall be to prepare a report on the accounts of the branch examined by him. He also needs to send it to the statutory auditor who shall deal with it in his report accordingly.

If the company appoints no separate Branch Auditor, it shall be the duty of the statutory auditor to do the audit of the Branch. It is the duty of the statutory auditor to include all the office of the company for its audit.

In case of a separate Branch Auditor, he shall prepare auditor’s report in the manner prescribed. He shall also state the reasons for qualification in his report if any etc.  Such duty shall also extend to the reporting of frauds as far as it relates to the concerning branch.

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