In particular instances, the principal activities with the holding firm is primarily investment holding. The transactions all through the year could be minimal, plus the expenditures are minimal at the same time. The only income earned could be the management fees earned through the subsidiaries. How do we check the management fees earned will not be materially misstated?
To begin with, we really should study the facts with the agreement involving the holding firm plus the subsidiaries, with respect towards the calculation of management revenue. As an illustration, 80% of total income or 100% of expenditures. These terms are certainly not uncommon in nowadays company society.Inter Company Auditing Management Fees
If we're auditing the holding firm accounts and issuing financial statement for any holding business. We ought to assure that the subsidiaries, exactly where the holding business earned management fees, get audited at the same time.
This can be for the reason that income with the holding firm is entirely dependent around the subsidiaries' income. They are the circumstances applicable for firm level financial statement.
