In today’s dynamic business landscape, companies often increase their ownership in other entities through a phased approach, commonly referred to as a step acquisition. While considerable attention is given to step acquisitions that result in the investor obtaining control and thereby requiring the application of business combination accounting under Ind AS 103, Business Combinations, there is comparatively limited guidance for situations in which an investor (a) acquires significant influence through an additional investment, or (b) increases its interest in an existing associate without a change in classification. Such transactions require careful consideration of accounting implications in accordance with Ind AS 109, Financial Instruments and Ind AS 28, Investments in Associates and Joint Ventures. This edition of the Accounting and Auditing Update (AAU) features an article that aims to discuss the key accounting considerations in consolidated financial statements arising from step acquisitions resulting in or retaining significant influence in an investee.
In March 2021, the Ministry of Corporate Affairs (MCA) issued a notification mandating that, effective 1 April 2023, Indian corporates must use accounting softwares which have an audit trail feature. In this regard, the MCA set out specific responsibilities for both companies and auditors, through an amendment to Companies (Accounts) Rules, 2014 and Companies (Audit and Auditors) Rules, 2014.This publication features an article that discusses the reporting trends in the implementation of the audit trail feature by the top listed companies on the National Stock Exchange (NSE), by market capitalisation. The article provides insights into the nature and frequency of modifications to audit trails, exceptions reported and presents a comparative analysis of audit trail reporting between FY 2024 and FY 2025.
As always, we have included a digest of 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 AAU.
For more information on this update, please write to aaupdate@kpmg.com.
