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The short answer
A Nigerian subsidiary of a US company should expect to need audited accounts every year. CAMA 2020 exempts only dormant companies and "small companies" from audit (s.402), and the small-company definition in s.394 requires, among other things, that none of the members is an alien. The audited accounts then support the CAC annual return, due within 42 days after the AGM, and the company income tax return, due within six months of year end.
Does your subsidiary need an audit?
Section 402 of the Companies and Allied Matters Act 2020 exempts a company from the audit requirement for a year if it has been dormant since incorporation, or if it qualifies as a small company under s.394. The exemption is not available to an insurance company, a bank or any company the CAC prescribes.
Section 394(3) sets the small-company test. The company must be private, with turnover of not more than ₦120 million and net assets of not more than ₦60 million (or amounts the CAC sets); none of its members may be an alien; none may be a government, government agency or nominee; and the directors must hold at least 51% of the equity.
A subsidiary owned by a US company fails the last condition in most cases, because the parent, not the directors, holds the shares, and its foreign membership raises the alien question too. Unless your Nigerian adviser confirms otherwise in writing, plan for an annual audit from the first year.
How the audit ties into the deadlines
| Item | Deadline | Source |
|---|---|---|
| First CAC annual return | Filing starts 18 months after incorporation | Kalepron Attorneys, Jul 2024 |
| CAC annual return with audited accounts | Within 42 days after the AGM | PwC CAMA guide, Apr 2021 |
| Company income tax return | Within six months after year end, or 18 months after incorporation if earlier; extension of up to two months at NRS discretion | PwC, reviewed May 2026 |
| US parent's Form 5471 | Attached to the parent's US return and due with it, including extensions | IRS instructions, Rev. Dec 2025 |
For a 31 December year end, the tax return is due by 30 June. Working back, the audit needs to be signed by early June at the latest, which means fieldwork in April and May and a closed trial balance by March. The same signed accounts feed the parent's Form 5471, which asks for the Nigerian company's financial information.
Who audits, and how to choose
The auditor must be a firm qualified to audit in Nigeria. For a US group, ask early whether the firm can also report in the format the parent needs, for example US GAAP adjustments or group reporting packs, and whether it has a US member firm that audits the parent. Agree the fee and timetable in an engagement letter before year end. See US GAAP and IFRS for a Nigerian subsidiary.
What auditors will ask for
- Bank statements for every account at year end, and bank confirmation letters.
- The fixed asset register and invoices for additions.
- Payroll records with proof of PAYE and pension remittances.
- Withholding tax credit notes received and receipts issued.
- Intercompany agreements and balances with the US parent, agreed on both sides.
- Certificates of capital importation for share capital or loans brought in.
- Contracts, board minutes and the share register.
Intercompany balances are the most common hold-up. If the parent's books say the subsidiary owes $50,000 and the subsidiary's books show a different naira figure, someone has to explain the gap before the auditor signs. Agree balances monthly, not at year end.
First-year problems auditors often raise
- Share capital not evidenced. Money sent by the parent without a certificate of capital importation, or booked as a loan in one set of books and as capital in the other.
- Missing withholding tax credit notes. Customers deducted tax but the company never collected the notes, so it cannot claim the credit.
- Payroll gaps. Salaries paid but PAYE or pension remitted late or not at all.
- Personal and company spending mixed. Expenses paid from a founder's personal account with no reimbursement record.
- Unsupported exchange rates. Naira and dollar items translated at rates nobody can trace to a source.
Each of these is cheaper to fix during the year than in the middle of fieldwork.
A worked timeline
- Example year end
- 31 December 2026
- January 2027
- Close December books; agree intercompany balances with the parent
- February to March
- Final adjustments; draft accounts to auditors
- April to May
- Audit fieldwork and queries
- Early June
- Accounts signed; tax computation finalised
- By 30 June 2027
- Company income tax return filed
- AGM, then within 42 days
- CAC annual return with audited accounts
Steps
- Confirm in writing whether the company is exempt; assume it is not.
- Appoint the auditor in the first year, before year end.
- Keep a document list for the auditor and fill it monthly.
- Agree intercompany balances every month.
- Book the AGM date so the 42-day CAC window is known.
See also the statutory audit deadline and company income tax for a US-owned subsidiary.
Where Pryme fits
Auditors ask for bank evidence. Through Pryme's partnership with VerifyDoc.ai, a Pryme customer can generate a verifiable statement that anyone, including an auditor, can check is genuine and unaltered. See verifiable statements.
Questions people ask
Does a foreign-owned Nigerian company need an audit?
Usually. The CAMA audit exemption is limited to dormant companies and small companies, and the small-company test excludes companies with alien members and requires directors to hold at least 51% of the shares.
When must a Nigerian company file audited accounts with the CAC?
With its annual return, within 42 days after the AGM, according to PwC's CAMA 2020 guide.
When is the tax return due for a Nigerian subsidiary?
Within six months of the financial year end, or 18 months after incorporation if that is earlier (PwC, reviewed May 2026).
Does the US parent need the Nigerian audited accounts?
It needs the subsidiary's financial information for Form 5471, filed with the parent's US return. Signed accounts make that much easier.
Sources
- LawGlobalHub: Section 402, Companies and Allied Matters Act 2020 (audit exemption) · accessed Oct 2026
- LawGlobalHub: Section 394, Companies and Allied Matters Act 2020 (small companies) · accessed Oct 2026
- Mondaq (Kalepron Attorneys): All you need to know about annual returns with CAC (29 Jul 2024) · accessed Oct 2026
- PwC Nigeria: Key compliance obligations under CAMA 2020 and CR 2021 (Apr 2021) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate tax administration (reviewed 29 May 2026) · accessed Oct 2026
- IRS: Instructions for Form 5471 (Rev. December 2025) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.