Governments around the globe have made commitments to limit global warming and reach net zero carbon emissions by 2050 (or sooner) in order to deliver against the targets of the Paris Agreement. In this regard, carbon markets have a significant role to play in helping to achieve these commitments by enabling governments and organisations to manage emissions and emissions reductions limits more effectively. Carbon markets generally provide incentive for taking actions to address climate change. Carbon credits generated by the reduction or removal of Greenhouse Gas (GHG) emissions from the atmosphere are usually traded by entities. These carbon credits are transferable or tradeable instruments. By purchasing carbon credits, a company can compensate the emissions from its direct and indirect activities to achieve net emissions targets or meet regulatory requirements. As more companies announce their commitments to reduce their carbon emissions or invest in renewable energy, there is a need to deliberate on the manner of accounting for carbon offsets and credits. This edition of Accounting and Auditing Update (AAU) contains an article which aims to provide an overview of regulatory requirement and accounting consideration relating to carbon credit.

The publication also carries an article on Key accounting and financial reporting issues- Fair valuation and financial instruments. Financial reporting enables companies to recount the transactions and events that have taken place in a company during a reporting period. It provides insight and transparency regarding the operations of the company, and thus facilitates users to make financial decisions, such as investing, lending, etc. High-quality financial reporting, which complies with relevant accounting and reporting standards, has been at the forefront of regulators’ priorities. Accordingly, regulators are globally undertaking reviews of financial statements of companies and highlighting non-compliances or improvement points. The article aims to highlight key areas that regulators have highlighted and provided improvement points in the area of fair value measurement and financial instruments, and will also provide illustrations of disclosures from thematic reviews performed by the Financial Reporting Council (FRC) and illustrative disclosures issued by KPMG IFRG Limited in 2023.

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

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