Transfer of funds through book entries

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CA SAJANA (Querist)
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10 January 2014 Dear Sir,

A holding company "A" transferred funds to company "C" wrongly which should have been transferred routed through company A - B - C.

Can we correct the routing through book entries or actual inflow and outflow of funding is required to cancel the entry...

Thanks and Best Regards,

CA Sajana E V

CA SAYANTAN BASU

CA SAYANTAN BASU (Expert)
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11 January 2014 Dear madam ,
From your question it is understandable that A COMPANY IS THE PARENT COMPANY BUT B AND C ARE THE SUBSIDIARY COMPANY So .... it is intercompany fund transfer ....
We have to see agreement between the companies and i think auditors of B Company or if all the companies have the same auditor , he may object bcoz in the bank statement of b ltd is no cash inflow if the amount has been directly transferred to C limited .
So A Company may request C COMPANY TO PAY SHARE TO B COMPANY ....
SO FROM AUDITING POINT OF VIEW THERE MAY BE QUALIFICATION IN THE AUDIT REPORT .....

OTHERWISE , SIMPLE BOOK ENTRIES CAN DO ....
IT ALL DEPENDS HOW AUDITORS TAKE THE MATTER ...