Related Party Transactions (RPTs) have been an area of key concern due to their inherent risk of conflict of interest and potential for misuse. In this regard, regulators have consistently emphasised robust oversight and transparency in disclosures to safeguard stakeholder’s interests. Over the years, the Securities and Exchange Board of India (SEBI) has strengthened its guidance towards RPTs through the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). This edition of the Accounting and Auditing Update (AAU) features an article that aims to discuss the key regulatory changes, practical requirements, and implications for listed companies pursuant to the recent developments by SEBI.
In today’s volatile business environment, marked by currency fluctuations, rising commodity prices, and escalating raw material costs, effective risk management has become critical for sustaining growth and ensuring organisational resilience. Entities face multiple exposures - such as interest rate, currency, and price risks - as part of their business operations. While some risks are inherent to business operations, others require mitigation through risk management strategies. Therefore, organisations are using derivatives like forward contracts, interest rate swaps, and commodity futures to hedge these exposures and stabilise financial outcomes. Many entities follow economic hedging as their risk management strategy. This leads to recording the hedging instrument (derivatives) and the hedged item on different bases which could lead to mismatches in profit and loss, as derivatives are measured at fair value while related items may follow different bases under Ind AS 109, Financial Instruments. ‘Hedge accounting’ addresses this volatility by aligning the treatment of hedging instruments and hedged item. This publication features an article highlighting risk management trends adopted by top Nifty 50 companies, including the use of derivative instruments and the application of hedge accounting.
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 AAU.
For more information on this update, please write to aaupdate@kpmg.com.
