## Branch Audit: Companies Act 2013 Requirements

### Statutory Framework – Section 128

#### Section 128(1) – Books of Account

Every company must keep its books of account at its Registered Office.

If the Board decides to keep books at any other place in India:
Inform the Registrar within 7 days of the Board decision (written notice).

#### Section 128(2) – Branch Office Books

A company with a Branch Office is deemed to comply with Sec 128(1) if:

1. Proper books of account are maintained at the branch office, AND

2. Periodical summarised returns are sent by the branch to the company's registered office.

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### Who Can Audit a Branch?

#### Branch in India

Option	Detail
Company's Auditor	Appointed under Section 139 of the Companies Act
Any other Qualified Auditor	Any person qualified to act as auditor under the Act

#### Branch Outside India

Option	Detail
Company's Auditor	Same auditor as for the main entity
An Accountant	A qualified accountant
Any other person qualified to act as Auditor	In accordance with the laws of that country

> Key distinction: For a foreign branch, the law of the host country governs who qualifies as an auditor — it need not be an Indian CA.

Worked example

### Example 1

Example 1 – Books at a different location

XYZ Ltd's registered office is in Mumbai. The Board passes a resolution on 1 June to maintain books of account at its Delhi corporate office.

Answer: XYZ Ltd must file a written notice with the Registrar by 8 June (within 7 days). Failure to do so within 7 days violates Section 128(1).

### Example 2

Example 2 – Foreign branch auditor eligibility

ABC Ltd (an Indian company) has a branch in Singapore. The company's statutory auditor is a CA firm in Chennai. Can a Singapore-licensed public accountant audit the Singapore branch?

Answer: Yes. For a branch outside India, the branch can be audited by the Company Auditor OR any person qualified to act as an auditor in accordance with the laws of Singapore. A Singapore CPA is eligible under Section 128 read with SA 600.

⚠️ Common exam mistakes

Forgetting the 7-day deadline to notify the Registrar when books are kept at a place other than the registered office.
Applying Indian CA qualification requirements to foreign branch auditors — for branches outside India, the host country's qualification standards apply.
Confusing Section 128(1) (location of books) with Section 128(2) (branch compliance) — both have separate conditions.
Thinking only the Company's Auditor can audit a branch — any other qualified auditor is also eligible for branches both in India and outside India.

Bare-Act text Section 128(1) and Section 128(2) · Companies Act, 2013 · click to expand

128(1): Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company. If books are kept at any other place in India as the Board may decide, the company shall within seven days of the decision file with the Registrar a notice in writing giving the full address of that other place. 128(2): Where a company has a branch office in India or outside India, it shall be deemed to have complied with the provisions of sub-section (1) if proper books of account relating to the transactions effected at the branch office are kept at that branch office and proper summarised returns periodically are sent by the branch office to the company at its registered office.

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Branch Audit – Section 128 of the Companies Act 2013

Worked example

⚠️ Common exam mistakes