India audit for foreign shareholder, fully remote delivery.

Indian subsidiary of foreign parent faces three concurrent audits:

1. Statutory Audit (Companies Act 2013)

• Mandatory for every Indian company (Pvt Ltd and Public Ltd) regardless of size.
• Appointment of statutory auditor at first board meeting (first year) and at AGM (ongoing).
• Signed by Indian Chartered Accountant (member of ICAI).
• Audit report under Companies Act 2013 + ICAI auditing standards (SA 700 series).
• Includes CARO 2020 reporting (Companies Auditor's Report Order) with 20+ specific matters.
• Deliverable: audited financial statements + audit report + CARO + Board's report.
• Deadline: before AGM (within 6 months of FY end — typically September).

2. Tax Audit (Section 44AB Income Tax)

• Mandatory if turnover > INR 1 crore (or 10 crore for digital transactions-dominated businesses).
• Signed by Indian CA.
• Form 3CA + Form 3CD (46-clause detailed questionnaire).
• Deadline: 31 October of AY (vs 31 July for non-tax-audit).

3. Transfer Pricing Audit (Section 92E / Rule 10E)

• Mandatory for any company with international transactions > INR 1 crore (nearly every foreign-subsidiary triggers).
• Form 3CEB signed by Indian CA.
• Deadline: 31 October (extended once in recent years to 30 November).
• See TP guide.

Indian accounting framework:

• Ind AS (Indian Accounting Standards) — converged with IFRS. Mandatory for:
•   — Listed companies.
•   — Unlisted companies with net worth >= INR 250 crore.
•   — Subsidiaries, JVs, associates of the above.
•   — Any company that voluntarily adopts Ind AS.
• AS (Accounting Standards, older) — for everyone else (small/medium unlisted companies with net worth < INR 250 crore).

For foreign subsidiaries, Ind AS adoption is often recommended even below threshold — it simplifies the IFRS consolidation pack for the foreign parent (Ind AS and IFRS are 95%+ identical post-2019 updates).

Pre-audit (May-June):

• Scoping call with Indian team + foreign parent finance.
• Data room setup (Google Drive / Dropbox / Box / foreign parent's SharePoint).
• Internal control walkthrough (video calls with Indian team).
• Audit plan + risk assessment memo shared with parent.

Fieldwork (June-August):

• Trial balance review.
• Sample testing of revenue, expenses, AR, AP.
• Confirmation letters: banks, major customers, major vendors, related parties.
• Physical verification (if required): BQP team member visits Indian office / warehouse once a year with video documentation shared with parent.
• Weekly status call with Indian management + bi-weekly with parent finance.

Reporting (August-September):

• Draft audit report + management letter.
• Discussion of findings with Indian management + parent.
• Finalisation + signing by Indian CA partner.
• CARO 2020 reporting.
• Delivery: PDF signed audit report + Word draft for parent's consolidation + Excel schedules.
• Parent-format reporting package: adjustments to IFRS / US GAAP, group reporting template (BQP fills parent's standard template).

Tax audit + TP audit (September-October): run concurrently; Form 3CA/CD/CEB signed and filed by 31 October.

• Related-party transaction disclosure: every transaction with foreign parent + sister companies + ultimate controlling party must be disclosed per AS-18 / Ind AS 24. Scrutinised in audit + Form 3CD + Form 3CEB.
• Transfer pricing adjustments: if historical TP position weak, audit may require provision for likely addition.
• Foreign currency translation: Ind AS 21 / AS 11 — closing rate for monetary items, historical for non-monetary. Mis-translation changes P&L materially.
• Group recharge / cost allocation: parent charges IT / HR / finance costs to Indian subsidiary. Benefit test required. Documentation of allocation key. Common audit finding + TP exposure.
• Reporting-package format: parent asks for US GAAP vs Ind AS reconciliation (Rev Rec ASC 606 vs Ind AS 115, Lease ASC 842 vs Ind AS 116, Fin Instrument ASC 326 vs Ind AS 109). BQP delivers reconciliation schedule.
• CARO 2020 reporting: 20+ specific matters; parent's auditor may ask about specific items (fixed asset register, loans + advances, inventory count, pending litigation, undisclosed income under IT scrutiny).

Last updated: 2026-10-13.