Sir in the this case it is asked that how the auditor will report the matter So the answer will be this na that he has to include other matter para and state that the particular branch couldn’t be audited due to inability to obtain SAAE. But in answer it is given include EMP para and ask management to disclose the the fact. Does including OMP para is wrong answer? As in your book you have given branch audit not done in example of OMP para
Hello Parth Below is answer for above question and it says, that we have to give modified opinion and explain effect in basis of modified opinion. See highlighted portion.
Further you put OMP if branch audit is done by someone else. You “May” also put OMP if during consolidation if “immaterial subsidiary” is not consolidated. If material subsidiary is not consolidated then it will lead to modification and not OMP. Cannot put EMP or OMP for no sufficient or appropriate evidence, in normal circumstances. OMP for immaterial subsidiary is only for consolidation purpose.
Branch Audit: As per section 143(8) of the Companies Act, 2013 if a company has a branch office, the accounts of that office shall be audited either by the auditor appointed for the company (herein referred to as the company’s auditor) under this Act or by any other person qualified for appointment as an auditor of the company under this Act and appointed as such under section 139, or where the branch office 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.
In the given situation, D Ltd. is a Delhi based company, having total turnover of `25 crores.
The company is having a branch office in USA (having a turnover of rupees 10 lakhs i.e. as converted from US dollars) in an area which is recently affected by storm and the office along with all accounting records was completely destroyed. Due to unavailability of records, the financial statements of D Ltd. for the financial year 2016-17 did not include the figures pertaining to the said branch.
Under such a circumstance beyond the control of the entity when the entity’s accounting records have been destroyed the auditor’s opinion has to be modified. The auditor has also to mention in his report the effect on the financial statements due to non-inclusion of financial data pertaining to the branch