Audit report to be submitted for purposes of APR submission to RBI

[Raam Srinivasan Swaminathan Kalpathi]

Could the experts enlighten on the format of the audit report to be provided with APR to be submitted to RBI relating to overseas subsidiaries?  Thanks

[YAGAY and SUN]

while the RBI does not mandate a standardized audit report format for submission along with the APR relating to overseas subsidiaries, it requires that the APR be substantiated by audited or duly certified financial statements that accurately reflect the financial performance and position of the overseas entity. The audit report must be professionally issued, legally valid, and fully aligned with the disclosures made in the APR, thereby enabling effective regulatory oversight under the FEMA framework.

[YAGAY and SUN]

Practical format (indicative structure)

1. Independent Auditor’s Report
2. Balance Sheet
3. Statement of Profit & Loss
4. Cash Flow Statement
5. Notes to Accounts
6. Certification / signing (with date & place)

Important: Figures in APR must exactly tally with audited financials.

[YAGAY and SUN]

Common mistakes to avoid

• Using management accounts when audit is mandatory
• Currency mismatch (APR must be in INR, converted correctly)
• Non-alignment between APR and audited numbers
• Missing audit report attachment in FIRMS portal

[Ryan Vaz]

? RBI does not prescribe a rigid, statutory format, but expects an Auditor’s Certificate / Audit Report confirming the financials of the overseas entity that are reported in the APR.

? In practice, RBI accepts a standardized auditor’s certificate covering specific confirmations.

? The certificate is uploaded as a PDF attachment along with APR.

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Audit Report / Auditor’s Certificate – Practical Format (Accepted by RBI)

Below is a widely accepted format used by Indian companies for APR filing:

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AUDITOR’S CERTIFICATE FOR ANNUAL PERFORMANCE REPORT (APR)

To

The Board of Directors

[Name of Indian Company]

1. We have audited / examined the financial statements of [Name of Overseas JV / Wholly Owned Subsidiary], incorporated in [Country], for the financial year ended [Date].
2. The financial statements have been prepared in accordance with the applicable accounting standards / laws of the host country.
3. Based on our examination and information provided to us, we certify that the particulars furnished in the Annual Performance Report (APR) relating to the above overseas entity are true and correct, including:
   • Capital invested
   • Reserves and surplus
   • Net worth
   • Turnover
   • Profit / Loss
   • Dividend declared / received
   • Other financial particulars as reported
4. We further certify that:
   • The overseas entity has not defaulted in statutory dues in the host country (if applicable).
   • The Indian party’s investment is in compliance with FEMA provisions relating to Overseas Direct Investment.
5. This certificate is issued for the purpose of submission to the Reserve Bank of India in connection with the APR filing under FEMA.

For [Name of CA Firm]

Chartered Accountants

Firm Registration No.:

Name of Partner:

Membership No.:

UDIN:

Place:

Date:

Signature & Seal

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Who Can Issue the Audit Report?

Scenario	Auditor
Overseas entity audited locally	Foreign statutory auditor’s report acceptable
Audit not mandatory abroad	Indian Statutory Auditor’s certificate based on books
Unaudited accounts	Management-certified financials + CA certificate (accepted in practice, but RBI may seek clarification)

AI Summary

APR audit report for overseas subsidiaries must include an auditor's certificate confirming audited or duly certified financials.
RBI does not mandate a rigid audit report format for APRs of overseas subsidiaries but requires audited or duly certified financial statements and a professionally issued auditor's certificate reconciling exactly with APR figures; accepted contents include an Independent Auditor's Report/Auditor's Certificate, balance sheet, profit and loss, cash flow statement, notes to accounts and certification details, with confirmations on capital, reserves, net worth, turnover, profit/loss, dividends and FEMA compliance. Foreign statutory audits are acceptable where conducted; where audit is not mandatory, Indian auditor certification or CA certified management accounts are accepted in practice, subject to RBI clarification.