Checklist and Audit Program of Joint venture

Audit Program for Joint Venture

1  Method of Accounting followed
     Separate set of books
      Same set of books

2  Legal Structure of the New Business
    Determine the Scope of Business as per the agreement
    Determine the duration of the Business/ agreement

3  Governing Structure
    Percentage of ownership in the Joint Venture as per the agreement
    Cooperation by the parties at operating level as per the agreement

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4  Management and Staffing
    The CEO (should come from one of the parents but be able to win both parents’
    confidence)

   Board of Directors (total number, number of appointees of each parent, frequency
   of meetings)

   Governance policies (regulatory compliance, board policies)

   Other key positions (who appoints what members of the management team and
   responsibilities for each position)

    Expatriates (legal, living and working arrangements)

    Delegation of authority, reporting structure

5  Funding

     Form of investment (know-how, technology, brand equity, equipment, land,
     cash and so on)

     Total investment and/or capital contribution by the co-venturers

     Analyze the cash call process and ensure funding adequately matches the
     operation needs without  material surplus

     Ensure project assets and costs are adequately managed, controlled
     and reported

6 Technology and Intellectual Property Transfer
   Technology transfer (patents, copyrights, know-how, trade secrets)
   Specifics on technology to be transferred
   Training and technical assistance

7 International Business Procedures
   Requirements for local or imported raw materials and components
   Foreign currency requirements (AS-11 Compliance)
   Taxes and import duties
   Regulatory approval process (cost, timing requirements)

8  Contracted Services
    Product/service development
     Marketing support

9  Revenue Sharing
    Dividend policy
    Royalties or transfer fees

Assets

10 Fixed Assets
     Get the list of the assets of the joint venture and approvals from the concerned
     co-venturer.

     Check the Fixed asset register
     Assets are properly managed as per the agreement

The ownership of the assets
Depreciation is charged properly for the assets.
Valuation of the asset at the termination of joint venture
Ensure project assets and costs are adequately managed, controlled
and reported

Insurance coverage is appropriate

11  Expenses

Ensure billed charges are in compliance with the operating agreement and
supported by adequate documentation

Ensure unrelated costs have not been charged to the project

Determine whether all vendor credits for deposits, refunds and returns have
been appropriately reflected in net project costs

12  Statutory Compliance

Ensure goods, services and applicable taxes are paid in a timely manner

13  Check List for Joint Venture Agreement

Applicable law.
Force Majeure
Holding shares
Transfer of shares
Board of Directors
General meeting.
CEO/MD
Management Committee
Important decisions with consent of partners
Dividend policy
Funding
Access.
Change of control
Non-Compete
Confidentiality
Indemnity
Assignment.
Break of deadlock
Termination
Security and confidentiality
Legal compliance
Fees and payment terms
Proprietary rights
Auditing rights
Events of Defaults and Addressing
Dispute Resolution Mechanism
Time limits
Location of Arbitration
Number of Arbitrators
Interim measures/Provisional Remedies
Privacy Agreement
Non-compete Agreement
Confidentiality Agreement
Rules Applicable
Appeal & Enforcement
Be aware of local peculiarities
Survival terms after the termination of the Joint Venture agreement

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