Key takeaways
- Private US companies usually have no statutory audit requirement.
- The Indian parent's ODI annual performance report needs audited accounts where it controls the US entity.
- Consolidation by the Indian parent also needs reliable, usually audited, subsidiary numbers.
On the US side
- Private US companies generally have no federal or state statutory audit requirement.
- An audit may still be required by lenders, investors, landlords, government contracts or SBA-type programmes.
- Tax filings — Form 1120 and, for foreign-owned entities, Form 5472 — don’t require audited accounts. See Form 1120 and Form 5472.
On the Indian side
- Consolidated financial statements: an Indian parent company must consolidate its subsidiaries. The parent’s auditor needs reliable subsidiary numbers — in practice, audited or reviewed accounts. See consolidating a US subsidiary.
- ODI annual performance report (APR): the Indian investor files an APR on its overseas entity each year, generally by 31 December. It is based on the entity’s audited financial statements; unaudited accounts (certified by the Indian entity’s statutory auditor or a CA) are allowed only where the Indian investor does not have control and the host country doesn’t require an audit. A wholly owned US subsidiary is controlled — so plan for an audit.
- Late or missing APRs attract late-submission fees and can block further overseas investment. See ODI rules for a US company.
Making it efficient
- Align the US subsidiary’s year-end with the parent’s, or prepare March-year-end numbers for consolidation.
- Keep US books on a basis that maps cleanly to Ind AS / Indian GAAP — US bookkeeping for Indian founders.
- Agree early whether a US CPA audit, an audit by an Indian firm, or a review satisfies the parent’s auditor and the APR.
Sources
Frequently asked questions
Does a US subsidiary of an Indian company need an audit?
US law generally doesn't require private companies to be audited, but the Indian parent usually needs audited accounts for consolidation and for the ODI annual performance report, which requires audited financial statements where the Indian investor controls the entity.
What is the ODI annual performance report?
An annual report an Indian investor files with its bank on each overseas entity it has invested in, generally by 31 December, based on the entity's audited financial statements (with limited exceptions where the investor lacks control and the host country doesn't require an audit).
Can unaudited US accounts be used for the APR?
Only where the Indian investor does not have control and the host country doesn't mandate an audit — then accounts certified by the Indian entity's statutory auditor or a CA may be used.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.