Sunshine (Helping All) (10575 Points)
02 October 2010hie..plz help me with this confusion...
Do we count a branch audit while counting the number of companies for checking the ceiling limit on audit of companies??\
in the book at one place its written that we dont include branch audit in the count...whereas in the next page its written that audit of many more than 1 branch of the same company is counted as 1.....
plz help..m confused....
Sunshine
(Helping All)
(10575 Points)
Replied 02 October 2010
m talking about the ceiling limit of an auditor....
Ayyswariya RG
(Knowledge Seeker)
(3711 Points)
Replied 02 October 2010
Branch audits are not to be considered
* Krishna *
(CA Student)
(6149 Points)
Replied 02 October 2010
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 02 October 2010
Hello Sneha Ji,
I agree with the replies of above members. In fact, your question itself gives its answer.
First be clear in one point that a CA can carry out maximum of 20 companies Audit in his individual capacity.
Secondly, a firm of CA’s can carry out Company audit to the tune of Number of partners * 20(individual limit). In no case individual limit should exceed.
Regarding the confusion in your question, remember that both Head office & its branches is one unit as long the appointment letter states that particular CA is eligible to carry out its audit. Suppose you are a CA of Reliance Digital equipments Ltd. The Pan India branches are 100 and you have got appointment letter (1st) to audit its Head office + 5 branches network. In this case your limit will be taken as audit for 1 company. Suppose you have left over limit of 19, you can very well use it for another assignment subject to the conditions of appointment letter & Sec. 224.
Now suppose if you get another appointment letter (2nd) from same head office regarding the audit of 1 more network at Delhi. This separate appointment letter will be considered as 1 audit in your individual capacity. So now you have exhausted 2 audit limits.
The above limit will be subjected to firm limit (if you are a partner in any firm say,PWC). Suppose PWC has exhausted its maximum limit of Company audit after your acceptance of 1st appointment letter & assuming you are not a partner in any other firm then you cannot accept 2nd appointment letter for PWC.
I hope i have made myself clear in the above points. Revert back, for any further doubts.
Sunshine
(Helping All)
(10575 Points)
Replied 02 October 2010
so the 2nd appointment letter for the delhi branch will be counted as an audit...
so in your opinion branch audit will be included?????
a simple question...i am appointed to audit a branch of xyz ltd......will it be included for calculating my ceiling???
Sunshine
(Helping All)
(10575 Points)
Replied 02 October 2010
just becoz u are receiving 2 separate appointment letters from the same company u are counting it as 2 for your ceiling limit????
Jithin
(Learner)
(1057 Points)
Replied 02 October 2010
Dear Sneha..no need to be confused..Branch audits are not considered in calculating the ceiling limit. The limit is with reference to only the appointments made u/s 224. Suppose you are appointed to audit any branch of a company. A different person is appointed u/s 224 to undertake audit of the company as a whole. Then, the branch audit undertaken by you will not be considered for ceiling purpose. Now if you are also the company auditor, still the branch audit will not be counted..but the company audit accepted by you will be counted.
Hope you got it cleared.
sachin kakkar
(CA)
(188 Points)
Replied 02 October 2010
dnt gt confused just emember if u r an auditor of ho then branch audit wil nt b counted but if u r apointed only for d branch then it will b counted dats it
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 02 October 2010
@ Sneha,
Understand the real intention of the legislature. Its basically to maintain quality of audit. My no's given above are just hypothetical. Branch Audit is considered as one unit as long as its done separately. You cannot expect one CA to audit all 10000+ branches of SBI. So in such case if you consider any assignment of SBI( Barakhamba Road branch, Delhi ) It will be considered as one separate unit for the purpose of calculation of limit under the authority of letter.
In the above case you cannot expect one CA to audit all branches of SBI. Its delegated to various CA under RBI empanelment scheme. On the other hand, if a small company with 2 branch can easily be audited by one CA. So in that case, branch is not considered as a separate unit. It forms part of one audit assignment under the authority of appointment letter.
So to conclude,
Branch Audit is not included subject to various conditions. You cannot generalize the statement . In one case it will hold good, in other may not be. Basically just think upon the authority given to CA. Think upon the practicality to handle the audit assignment.
If you say branch audit is not included in ceiling then in that case CA will have the ability to take as many branches like that in case of SBI network. Then you will say my audit limit to carry some more is still there and will ask for more assignments for money.This will lead to sacrificing the quality of audit work. So understand that statement with further statements given in other paras. Do not isolate it. Now read those two paras from your book and link. Do not generalize 1st statement of your book. Link Ayyswaria & Krishna answer with the above background.
Hope I am clear to you.
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 02 October 2010
| Originally posted by : Sneha Bagla | ||
 |
so the 2nd appointment letter for the delhi branch will be counted as an audit... so in your opinion branch audit will be included????? a simple question...i am appointed to audit a branch of xyz ltd......will it be included for calculating my ceiling??? |
 |
Yes it will be considered as a separate unit. Its not my opinion, the section says like this. Read and link both the points .
Answer to your above question posed of XYZ ltd. demands some more questions to be asked like---
1-- Is the CA having limit to audit??
If yes,
2-- Is that branch audit a separate assignment under authority of letter without audit of head office??
then this audit will be considered for limit purpose. Don't think it is always necessary to get head office audit with branch. Practically may not be possible.
If you get head office also in that assignment, then treat both head office & branch as one unit for the purpose of limit.Do not separate it for the purpose of limit if authorized under the appointment letter.
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 02 October 2010
| Originally posted by : Sneha Bagla | ||
|
|
just becoz u are receiving 2 separate appointment letters from the same company u are counting it as 2 for your ceiling limit???? |
|
At the face of it I will say yes. Go deep into it.
Suppose 2nd letter audit which is given after some time to another CA and not to you. Will you not consider it for limit purpose of another CA??? Answer to this question lies in my previous reply of SBI case. Link it and visualize.
Hope now you are fully clear with it. Read that full topic in one context and do not isolate any point.
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 02 October 2010
Ek mazaak... If you were CA of Satyam under great Ramalinga Raju regime. Suppose you got authorized to Audit only its Hyderabad offices. But as you know Mr. Ramalinga raju is very great fellow. He whispered and said to audit also Chennai Satyam offices. You said " Nothing is free of cost". He gave you some soft tangible papers. You said ok RR sir. I will audit Chennai Satyam also. Remember you are not authorized in writing.
Will you consider that audit assignment or not. ???? Will you consider.??/ If you consider, you will be loosing your 1 extra limit.
Be careful in taking any such assignments in future which will create any further Asatyam in our country. Don't compromise on Audit quality. Follow all ethics and safeguard shareholders interest.
Don't take it personally. Its just for giving you the logic behind ceiling of audit.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
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