“Our subsidiary is audit-exempt in that country, so there is nothing to audit for the APR.” AD banks hear this every autumn, and it is right only about half the time.
Under Regulation 10(4) of the Overseas Investment Regulations, 2022, unaudited statements can support the APR only if both conditions hold: the Indian investor has no control over the foreign entity, and the host country does not require an audit. A wholly owned subsidiary is controlled by definition, so a local exemption alone does not remove the audit.
Quick country snapshot for small private subsidiaries:
United States: no general audit requirement, but a controlled entity still needs an audit for the APR.
United Kingdom: exempt if two of three size tests are met, with group tests and a 10% member right to demand an audit.
Singapore: exempt if two of three size tests are met for two years, plus the group test.
Hong Kong: no exemption, every active company is audited by a practising CPA.
Australia: small companies are generally exempt, but not when foreign-controlled.
UAE: mainland LLCs must be audited, free zone rules depend on the zone.
Canada: the auditor can be waived, but the waiver must be renewed every year.
Example: an Indian company owns 100% of a Singapore company that is exempt from a local audit. The first test passes, but the second fails because 100% ownership means control, so the APR still needs audited statements.
The exemption belongs to the country, but the audit duty belongs to the investor.
Full guide with the complete country table:
https://accorppartners.com/blogs/apr/which-countries-dont-require-a-statutory-audit-a-country-wise-table-for-apr-filers
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