A guide to audit and assurance in India for US businesses
India has its own audit rules, its own accounting standards and its own financial year. If your US company owns an Indian subsidiary, or you are an Indian business with US investors, several different audits can apply in the same year. This guide explains each one, who needs it, when it is due and how it connects to reporting in the United States.
Why audits in India matter to US companies
An Indian subsidiary of a US company is a separate legal entity under Indian law. It must keep its own books, have them audited by an Indian Chartered Accountant every year and file the audited financial statements with the Registrar of Companies. The US parent's auditors usually rely on that Indian audit, or on additional procedures performed in India, when they sign the group accounts.
The Indian audit therefore does two jobs at once. It meets Indian legal requirements, and it feeds the numbers that end up in the US consolidated financial statements, the US tax return and, for listed groups, the controls testing required under the Sarbanes-Oxley Act.
The main types of audit in India
Below are the audits our clients ask about most often. Each has its own page with the detailed rules, documents and timelines.
| Audit | What it is | Who usually needs it |
|---|---|---|
| Statutory audit | Annual audit of financial statements under the Companies Act, 2013, ending in an auditor's report filed with the Registrar of Companies | Every company registered in India, including subsidiaries of US companies |
| Tax audit | Audit of books for income-tax purposes, with a detailed report in the prescribed form | Businesses and professionals whose turnover or receipts cross the income-tax limits |
| Internal audit | Ongoing, risk-based review of processes and controls, reporting to the board or audit committee | Listed companies and companies above the size limits in the Companies Act rules |
| Internal financial controls and RCM | Documenting and testing controls over financial reporting, often using a risk control matrix | Companies whose auditors must report on internal financial controls, and Indian entities in a US SOX programme |
| Concurrent audit | Near real-time audit of transactions, mainly in banks | Banks and financial institutions regulated by the Reserve Bank of India |
| Stock audit | Verification of inventory and receivables that support bank borrowing | Borrowers with working capital limits, as required by their bank |
| Due diligence | Investigation of a business before an acquisition or investment | US buyers and investors looking at Indian companies |
| Forensic audit | Investigation of suspected fraud or financial misconduct | Companies, boards and investors dealing with suspected wrongdoing |
Two related services sit alongside these audits: peer review, which checks the quality of an audit firm's own work, and GST audits and trust audits, which apply to specific taxes and entities.
The Indian audit calendar
Most Indian audit deadlines follow from the financial year ending on March 31. For a typical private company, the year looks like this:
- April to June: books are closed for the year to March 31 and the statutory audit fieldwork starts.
- By September 30: the annual general meeting (AGM) adopts the audited accounts. The first AGM can be held within nine months of the first year end.
- One month before the income tax return is due: the tax audit report is filed. The normal date is September 30, and for tax year 2025-26 it was extended to October 21, 2026.
- Within 30 days of the AGM: the audited financial statements are filed with the Registrar of Companies in Form AOC-4.
- Within 60 days of the AGM: the annual return is filed in Form MGT-7.
- Through the year: internal audit reviews, quarterly reporting packages to the US parent and, for banks, monthly concurrent audit reports.
Accounting and auditing standards used in India
Indian companies prepare financial statements under one of two frameworks. Listed companies, companies with a net worth of ₹250 crore or more, and their holding, subsidiary and associate companies follow Indian Accounting Standards (Ind AS), which are closely based on IFRS. Other companies follow the older Accounting Standards notified under the Companies Act.
Audits in India are carried out under the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India (ICAI). These are closely aligned with the International Standards on Auditing. The audit report format follows SA 700, and the National Financial Reporting Authority (NFRA) oversees audits of listed and other large companies.
In India
- Ind AS or Indian Accounting Standards
- Standards on Auditing issued by ICAI
- Financial year April to March
- Audit report filed with the Registrar of Companies
In the US group
- US GAAP for the consolidated accounts
- PCAOB or AICPA auditing standards for the group audit
- Usually a January to December year
- Reporting package sent to the group auditor
Because the frameworks differ, the Indian trial balance usually needs a set of adjustments, such as for leases, revenue timing or share-based payments, before it is used in US GAAP group accounts. We prepare and document those adjustments so your group auditors can follow them.
Working with your US group auditors
When a US group auditor relies on work done in India, they normally send group audit instructions. These set out the materiality to use, the accounts in scope, the deadlines and the reporting forms. We work to those instructions, keep the working papers they may ask to review, and answer their questions directly.
- Calendar-year reporting packages prepared to your group's chart of accounts
- Reconciliations between the Indian statutory accounts and the US GAAP package
- Intercompany balances and transfer pricing documentation agreed with the US parent
- Support for SOX controls testing at the Indian entity
- Year-end inventory counts and confirmations performed locally in India
We also coordinate Indian regulatory filings that US parents often overlook, such as foreign investment reporting to the Reserve Bank of India through FDI filings and the annual FLA return.
Your first year in India: an audit checklist for new subsidiaries
US companies setting up an Indian subsidiary often focus on incorporation and hiring, and only think about audits when the first year end arrives. A few early steps make the first audit much easier:
- Appoint the first auditor within 30 days of incorporation. The board makes this appointment, and the auditor holds office until the first annual general meeting.
- Check the length of the first financial year. A company incorporated on or after January 1 can end its first financial year on March 31 of the following year, so the first year can be up to 15 months long.
- Keep books that meet Indian rules. Books can be kept electronically, but a backup must be kept on servers physically located in India, updated daily, and the accounting software must keep an audit trail.
- Report the foreign investment. When shares are issued to the US parent, Form FC-GPR must be filed with the RBI within 30 days of allotment, through our FDI filing service.
- Register for taxes early. GST registration, a tax deduction account number for TDS and payroll registrations should be in place before the first invoices and salaries.
- Agree intercompany terms. A written services or distribution agreement with the US parent supports both the statutory audit and transfer pricing.
Our company compliance team can run these steps alongside the audit, so nothing falls between the cracks in the first year.
How to work out which audits apply to you
The audits you need depend on your legal form, size, sector and the people who rely on your accounts. A quick way to think about it:
- Every company registered in India needs a statutory audit, whatever its size or turnover.
- If turnover is above ₹1 crore (or ₹10 crore where almost all receipts and payments are through banks), a tax audit is usually required.
- If the company is listed or above the size limits in the Companies Act rules, an internal audit is mandatory.
- If the company borrows from banks against stock and receivables, the bank may ask for a stock audit.
- If you are buying or investing in an Indian business, a due diligence review comes before the deal.
- If something has gone wrong, a forensic audit establishes the facts.
Limited liability partnerships have their own rule: an LLP must have its accounts audited if its turnover is above ₹40 lakh or its partners' contribution is above ₹25 lakh. Trusts and societies follow the rules of the state law they are registered under, plus income-tax and FCRA requirements.
Audits carried out from India for clients in the US
Our team is based in India and most of the audit work takes place online. Documents are shared through encrypted links, discussions take place on video calls scheduled in your US time zone, and approvals are signed digitally. Where the work needs someone on site, such as an inventory count or a fixed asset verification, our team attends at the Indian premises.
This set-up suits US companies with a small or growing Indian entity that does not have a large local finance team. It also suits NRIs and Indian-American founders who run a business in India from the US and need someone local to manage audits and filings.
Assurance and certification beyond the annual audits
Not every assurance engagement is a full audit. Chartered Accountants in India also carry out reviews, agreed-upon procedures and certifications under ICAI's standards. Our US-linked clients most often ask for:
- Review of interim financial information, for example a half-year or quarterly review for a US investor or lender, under ICAI's review standards
- Agreed-upon procedures, where a US parent or buyer specifies the checks to perform and we report the factual results
- Certificates for foreign remittances, including the Chartered Accountant's certificate in Form 146, which replaced Form 15CB from April 1, 2026
- Net worth and income certificates used, for example, by parents in India sponsoring a child's studies in the US
- Valuation and pricing certificates for share issues and transfers involving US investors, under FEMA rules
- Controls readiness for service organisation reports, which a risk control matrix supports
Each of these follows its own ICAI standard or guidance note, and we agree in writing exactly what will be checked and what the report will say before we start.
How audits support the board and audit committee
Audits are not only a filing requirement. They give the board of the Indian company, and the US parent, an independent view of the numbers and the controls behind them. Listed companies and certain larger public companies must have an audit committee under section 177 of the Companies Act, which oversees the auditors, reviews the financial statements and evaluates internal financial controls.
Under the Standards on Auditing, the statutory auditor communicates significant findings to those charged with governance, including control weaknesses, difficult judgements and uncorrected misstatements. The internal auditor reports to the audit committee during the year. Together with controls testing and, where needed, a forensic review, these reports give directors in India and executives in the US the same picture of the business. Our corporate governance team can help set up the board and committee processes.