07 July 2010
X & Co, Chartered Accountants, is the statutory Auditor, for both Holding Company and a subsidiary company. Since the audit of the subsidiary has not been completed, because of some problem, what are the permissible option as per AS and SEBI: 1.The unaudited figures of the subsidiary figures need to be consolidated with a qualification from the auditor, X & Co.
2. The figures of the subsidiary should not be consolidated as because this is unaudited and the auditor will give qualification giving the cause as non-consolidation.
by mere fact that the company B is a subsidiary and company A is a listed entity, entity A has to compulsorily prepare a consolidated financial statements.
it cannot exclude from consolidating the company b by virtue of account not been audited.
the only option available to an auditor is to get the managements accounts drawn by the management, take a letter of representation for all the compliances,
and finally
you should also qualify your audit report stating that the the consolidation of company b has been done on the basis of management accounts , audit of which has not been completed of even date, which is represents the total assets of xxxxx, liabilities of xxxx, income of xxxxxx and profit of rs. xxxxxx non cash items of xxxx, any further required disclosures.
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