Dear All,
I've had a quick look around the site but can't seem to find an answer.
Basically, I have a new client who is looking at incorporating a UK company to act as subsidiary to a foreign company (India). Whilst I am confident about the incorporation side, I have a few queries about the group accounting. My comments are as follows:
1. Incorporation is as normal but with an Indian parent as sole shareholder. (I believe this to be correct)
2. Accounting as normal with transactions between and the parent and sub as well as between sub and UK clients (I believe this to be correct)
3. Annual accounts are prepared as normal for the sub with ultimate parent being disclosed (I also believe this to be correct)
4. Accounts will be consolidated into Indian Company if required (This is the Indian parent responsibility and I do not believe further filing is required with Co House)
Now for the killer question...
5. Audit... and I'm a little sketchy on the Indian Company at this stage... If the Indian parent requires audit of the UK sub, clearly audit will be required under Indian regulations.However, if the company is also part of a group which is not small (by virtue only of the Indian parent), would it also need auditing under the UK framework and would this effectively mean 2 audits?
I'm sure this is a straight forward question and am equally sure that if I thought long enough and hard enough, I'd come up with the answers. However, I would love some advice and for that I will be eternally grateful.
Thanks in advance.
Dave
Replies (3)
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audit
The audit is done under international auditing standards. IAS. So you only do one.
The accounts are prepared under the selected accounting framework stipulated by the parent. So they might want the accounts prepared under Indian GAAP (if there is one?) or IFRS or FRS100 or FRS101 or FRS102 or FRSSE. To be honest if its a small co theres probably not a lot of difference.
You may get an audit questionnaire from the holding co auditor if you become material!!
Hope that helps
There are two parts to the killer question:
UK part:
The auditor: if an audit is required under s.479 then the auditor should be qualified under s.1219 et seq. Further to s.1221 there is this order as well. But this register, as far as I know, is for audit of a company listed on UK stock exchanges. So to my knowledge the group accounts should be audited by appropriately(UK) qualified auditors
Accounting standard: Besides UK GAAP, IFRS acceptable.
Indian part:
If it is not a listed entity then there is no audit required of the UK subsi. Consolidated accounts are prepared but not audited. If listed then consolidation required, and local GAAP applies, but the local auditor can 'rely' on the foreign audit(or).
Accounting standard: If not listed then UK GAAP should be fine. If listed, then Indian GAAP applies.
@Euan
Good point, There I am thinking at the holding company level, you may need 2 sets then. When we control overseas audits of UK holding companies, our requirement is the accounts are prepared under UK GAAP .