25 June 2013
As per the notification no. RB-120 issued by RBI dated July 7, 2004 Indian party is required to submit form APR for is foreign JV/WOS within 60 days from the end of statutory period as prescribed by the laws of the host country.
Text of Para 15(iii) of the notification reproduced below:
“15. Obligations of the Indian Party An Indian Party, which has acquired foreign security in terms of the Regulations in Part- I, shall –
(iii) submit to the Reserve Bank every year within 60 days from the date of expiry of the statutory period as prescribed by the respective laws of the host country for finalisation of the audited accounts of the Joint Venture/Wholly Owned Subsidiary outside India or such further period as may be allowed by Reserve Bank, an annual performance report in form APR in respect of each Joint Venture or Wholly Owned Subsidiary outside India set up or acquired by the Indian Party and other reports or documents as may be stipulated by the Reserve Bank.”
Further, RBI issued circular RBI/2011-12/473 dated March 28, 2012 in which certain points were liberalised. Point no 6 talks about APR in which it is written that if the accounts of foreign JV/WOS are not subjected to audit as per the laws of host country than the auditor of Indian auditor may certify the true and fair view of the foreign JV/WOS based on unaudited annual accounts adopted and ratified by the Indian party.
Text of point 6 of the circular reproduced below:
“6. Submission of Annual Performance Report Presently, Regulation 15(iii) of the Notification prescribes that Indian party needs to submit to the Reserve Bank through the designated Authorised Dealer bank every year an Annual Performance Report in Form ODI Part III in respect of each Joint Venture or Wholly Owned Subsidiary outside India, set up or acquired by the Indian party, after the finalization of the audited accounts of the Joint Venture / Wholly Owned Subsidiary outside India. Where the law of the host country does not mandatorily require auditing of the books of accounts of JV / WOS, the Annual Performance Report (APR) may be submitted by the Indian party based on the un-audited annual accounts of the JV / WOS provided: a. The Statutory Auditors of the Indian party certifies that ‘The un-audited annual accounts of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS’ and b. That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party. “
In the case of XYZ Limited the accounts of foreign subsidiaries are neither audited in accordance with the laws of host country, nor certified by stat auditor of the company. These accounts are audited by the other Indian auditors in accordance with Indian GAAP.
My point is can we rely on such accounts and issue APR
CAclubindia
