3.5 Query Interpretation of Companies (Branch Audit Exemption) Rules, 1961—3. Rule 4(b) is as under: “The Central Government, on application made to it in this behalf, may, after making such enquiry as it thinks fit, by order in writing, exempt the Branch Office of a Company from the provisions of Section 228 on any of the following grounds, viz.,
“That a company has made arrangements for the audit of the Accounts of the Branch Office by a person otherwise qualified for appointment as a Branch Auditor even though such person is an employee of the Company”.
As per Section 226 of the Companies Act, a person shall not be qualified for appointment as an Auditor unless he is a Chartered Accountant within the meaning of Chartered Accountants Act, 1949. The Chartered Accountants Act defines a Chartered Accountant as a person who is a member of the Institute.
To comply with the provisions of the Companies (Branch Audit Exemption) Rules, is it necessary for the Chartered Accountants so employed to hold the certificate of practice as well or can they be only Associates or Fellows without holding certificate of practice? I shall be glad to have your early clarification in the matter.
Opinion An employee of a company, who is required to audit the books of a branch office under the Companies (Branch Audit Exemption) Rules, 1961, should be in possession of a Certificate of Practice for the purpose of carrying out this work. The requirement of Rule 4(b) is that a person should be otherwise qualified for appointment as a branch auditor, and this he can be only if he holds a Certificate of Practice from the Institute.
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