Foreign entity

Subsidiary does not have any control over Parent. The parent can audit the subsidiary. The audit is done usually in their own presentation currency and translated while consolidating, 

Holding Company is liable for Subsidiary. Therefore Audit would apply to Subsidary incase of consolidation. 

Consolidated Financial Statement will be prepared in the functional currency of the Company.

Of course, presentation currency and functional can be the same as well in the case of national companies. For a US subsidiary, it’s US dollar separate entity statements. To the Indian parent, it is presented currency and translated to primary functional currency