What is a Statutory Audit for Associate Company?

A statutory audit for an associate company is the yearly audit of its accounts by an independent Chartered Accountant, as the Companies Act, 2013 requires. An associate company is a separate company in the eyes of the law. It must get its own accounts audited every year, even if another company holds shares in it.

Is Statutory Audit Compulsory for an Associate Company?

Yes. An associate company is a separate company under the Companies Act, 2013. It must get its accounts audited every year by a practising Chartered Accountant (CA), like any other company. Being linked with another company through a shareholding does not give any exemption from audit.

An associate company has one more side to its audit story. The company that holds the shares, called the investor company, must also show the associate in its consolidated financial statements by a method called the equity method. So the audit of an associate matters for two companies: the associate itself and the investor.

CA Arpit Gupta helps associate companies, joint venture companies and their investors with audit, group reporting support and ROC filings.

What Documents Are Needed for the Audit of an Associate?

• Certificate of Incorporation, MOA and AOA
• Details of shareholders and the percentage held by the investor
• Joint venture agreement or shareholders' agreement, if any
• PAN, TAN and GST details of the company
• Trial balance and ledgers
• Bank statements and bank confirmations
• Sales, purchase and expense records
• Agreements with the investor: supply, service, royalty, loan and guarantee
• Balance statements and confirmations with the investor and group
• Fixed asset register and inventory records
• Loan statements and agreements
• Share capital records and statutory registers
• GST, TDS and Income Tax records
• Payroll, PF and ESI records
• Minutes of Board and general meetings
• Related party details and approvals
• Previous year's audited accounts and ROC forms

How Does Our Audit Process Work?

1. Call or WhatsApp us
2. Tell us about your company
3. We check the status like associate, joint venture or subsidiary, and whether small company relief applies
4. We confirm our independence and share the proposal and fee
5. The auditor is appointed with consent, eligibility certificate and Form ADT-1
6. We plan the audit
7. You share the books and records
8. We audit the accounts
9. We prepare the information needed by the investor for its group accounts, where asked
10. We discuss the findings and the corrections needed
11. We finalise the Auditor's Report
12. We help with the AGM papers and the ROC filings

What Mistakes Should Associate Companies and Investors Avoid?

• Thinking that an associate does not need an audit because it is not controlled by anyone
• Treating an associate as a subsidiary, or the other way round, in the accounts
• Not checking whether the 20% influence test or an agreement makes the company an associate
• Not agreeing on timelines for sharing accounts between the investor and the associate
• Not matching balances between the investor and the associate
• Giving loans or guarantees without proper approval
• Not recording the investor's share of profit and loss correctly
• Ignoring the fall in the value of the investment
• Forgetting the details of associates in Form AOC-1
• Assuming that small company relief is not possible for an associate

Why Choose CA Arpit Gupta for Associate Company Audit?

• Practising Chartered Accountant
• Correct classification
• We apply the limits and tell you which reports apply
• Investor support
• Complete ROC support
• Help with old defaults
• We explain every point clearly
• Easy contact

Get Your Associate Company Audit Done on Time

Do not let a late audit at the associate delay your group accounts. Share your company details with CA Arpit Gupta, and we will plan and complete your audit and filings.

Call or WhatsApp CA Arpit Gupta at: +91-7081220600.