(1) Where a company has a branch office, the accounts of that office shall be audited by the companys auditor appointed under section 224 or by a person qualified for appointment as auditor of the company under section 226, or where the branch office is situate in a country outside India, either by the companys auditor or a person qualified as aforesaid or by an accountant duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of that country.
(2) Where the accounts of any branch office are audited by a person other than the companys auditor the companys auditor:
(a) shall be entitled to visit the branch office, if he deems it necessary to do so for the performance of his duties as auditor, and
(b) shall have a right of access at all times to the books and accounts and vouchers of the company maintained at the branch office:
Provided that in the case of a banking company having a branch office outside India, it shall be sufficient if the auditor is allowed access to such copies of, and extracts from, the books and accounts of the branch as have been transmitted to the principle office of the company in India.
(a) Where a company in general meeting decides to have the accounts of a branch office audited otherwise than by the companys auditor, the company in that meeting shall for the audit of those accounts appoint a person qualified for appointment as auditor of the company under section 226, or where the branch office is situate in a country outside India, a person who is either qualified as aforesaid or an accountant duly qualified to act as an auditor of the accounts of the branch office in accordance with the laws of the country, or authorise the Board of directors to appoint such a person in consultation with the companys auditor;
(b) the person so appointed (hereafter in this section referred to as the branch auditor) shall have the same powers and duties in respect of audit of the accounts of the branch office as the companys auditor has in respect of the same;
(c) the branch auditor shall prepare a report on the accounts of the branch office examined by him and forward the same to the companys auditor who shall in preparing the auditors report, deal with the same in such manner as he considers necessary;
(d) the branch auditor shall receive such remuneration and shall hold his appointment subject to such terms and conditions as may be fixed either by the company in general meeting or by the Board of directors if so authorised by the company in general meeting.
(4) Notwithstanding anything contained in the foregoing provisions of this section, the Central Government may make rules providing for the exemption of any branch office from the provisions of this section to the extent specified in the rules and in making such rules the Central Government shall have regard to all or any of the following matters, namely:
(a) the arrangement made by the company for the audit of accounts of the branch office by a person otherwise qualified for appointment as branch auditor even though such person may be an officer or employee of the company;
(b) the nature and quantum of activity carried on at the branch office during a period of three years immediately preceding the date on which the branch office is exempted from the provisions of this section;
(c) the availability at a reasonable cost of a branch auditor for the audit of accounts of the branch office;
(d) any other matter which in the opinion of the Central Government justifies the grant of exemption to the branch office from the provisions of this section.