Many companies are undertaking supplier financing arrangements as a means to improve their working capital position. Reverse factoring is a common form of supply chain financing involving three parties: an entity that purchases a good or service, a supplier providing those goods or services and a financial institution. The arrangement typically allows the supplier to be paid by the financial institution at a date earlier than the entity pays the financial institution. As the terms of reverse factoring arrangements would vary depending on the agreement between the three parties, the presentation in the balance sheet and statement of cash flows may also change. Further, on account of the increasing prominence of reverse factoring arrangements as source of financing, expectations of users of financial statements with respect to more detailed and transparent disclosures of such arrangements has also increased. At present, there is no explicit guidance in Ind AS or IFRS on presentation of reverse factoring arrangements in the financial statements. However, in near future International Accounting Standards Board (IASB) would be issuing guidance on this topic. This edition of Accounting and Auditing Updated (AAU) contains an article which aims to provide the key considerations for presentation of reverse factoring arrangement in the balance sheet, statement of cash flows and notes to the financial statements.

All companies are encountering climate-related risks and opportunities, however some would be affected more than others. As the impact of climate change intensifies, investors and regulators are increasingly seeking greater transparency of climate-related information in financial statements. Considering growing implications of climate risk and lack of sufficient disclosure of climate-related information in financial statements, the regulators around the globe such as Securities Exchange Commission (SEC), the European Union (EU) and the International Sustainability Standards Board (ISSB) are working on developing the disclosure requirements relating to climate risk. The proposed standards and guidelines would support companies in providing information about their exposure to climate-related risks and opportunities. In India, Securities and Exchange Board of India has issued Business Responsibility and Sustainability Reporting (BRSR) requires reporting on environmental aspects. The article on this topic aims to provide an overview of climate related risks and its disclosures.

As is the case each month, we have also included a regular round-up of some recent regulatory updates in India.

We would be delighted to receive feedback/suggestions from you on the topics we should cover in the forthcoming editions of the AAU.

For more information on this update, please write to