FEMA Audit examines transactions involving foreign exchange to ensure compliance with the Foreign Exchange Management Act, 1999 and the regulations and directions issued by the Reserve Bank of India. It covers inflows, outflows, investments and reporting obligations.
Scope of FEMA Audit
The review includes:
Examination of current account and capital account transactions
Verification of overseas direct investment and foreign direct investment documentation
Review of external commercial borrowings and trade finance transactions
Assessment of compliance with reporting requirements to RBI and authorised dealers
Evaluation of documentation supporting remittances and receipts
Methodology
Procedures involve:
Mapping of foreign exchange transactions
Verification against FEMA provisions and RBI notifications
Review of Form filings and annual returns
Identification of non-compliances and reporting gaps
Outcomes
The audit provides an assessment of the entity’s compliance status under FEMA and highlights areas requiring corrective action or further documentation.