The evolving landscape of financial reporting continues to be shaped by the standard setting initiatives of the International Accounting Standards Board (IASB), which remains focused on enhancing transparency, comparability, and consistency in financial statements. Recent developments reflect a dual approach: targeted amendments to existing International Financial Reporting Standards (IFRS) and introduction of new standards to address application challenges and reduce interpretational differences, alongside broader projects aimed at improving the overall structure and usefulness of financial statements. With several amendments and new standards becoming effective from 1 January 2026 and 1 January 2027, these initiatives seek to close gaps in current requirements, strengthen the application of professional judgement, and improve the relevance of financial information for users.
For Indian entities, these developments are particularly significant given the close convergence of Indian Accounting Standards (Ind AS) with IFRS. Companies with global operations or listings also prepare and present financial statements under IFRS and accordingly, such companies will have to evaluate the impact of these amendments/ new standards on their financial reporting, while others may need to proactively assess potential implications even before formal adoption in India. This includes evaluating changes to accounting policies, presentation of financial statements, disclosures, and related systems and processes to ensure readiness for transition. This edition of the Accounting and Auditing Update (AAU) includes an article that provides an overview of the key amendments and newly issued IFRS standards, along with a discussion of critical areas requiring judgement and their potential impact in the Indian context.
The implementation of India’s four labour codes marks a significant shift in the regulatory environment governing employment, consolidating 29 existing laws into a unified and modernised framework. Comprising the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020, these reforms extend across the entire employee lifecycle and give rise to a number of interpretational and practical implementation considerations. The notification of the final rules by the Central Government in May 2026 has provided greater clarity. However, organisations continue to operate in a dynamic environment characterised by varying levels of readiness across states and ongoing clarification on key provisions. This edition of the AAU includes an article where key areas of interpretation and implementation have been discussed in detail as regulatory clarity continues to evolve.
Reserve Bank of India (RBI) issued the Foreign Exchange Management (Export of Goods and Services) (First Amendment) Regulations, 2026 to restore the export realisation timeline under the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 from 15 months back to 9 months. The RBI also introduced a framework for commercial banks for lending to Real Estate Investment Trusts (REITs) and issued a series of directions to withdraw the requirement for certain banks to maintain Investment Fluctuation Reserves. In parallel, the Ministry of Corporate Affairs (MCA) expanded the scope of Corporate Social Responsibility (CSR) through recognition of Zero Coupon Zero Principal instruments as an eligible CSR activity by their inclusion in Schedule VII of the Companies Act, 2013 and provided compliance relaxations for filing Form DPT-3 (Return on deposits) up to 31 July 2026. At the international level, the IASB issued IFRS 20, Regulatory Assets and Regulatory Liabilities and the Financial Accounting Standards Board (FASB) issued ASU 2026-02, on Environmental Credits and Environmental Credit Obligations (Topic 818) highlighting the increasing emphasis on transparency in financial reporting. We have also covered other key updates issued during the month by various regulators in the regulatory updates section of the AAU.
We would be delighted to receive feedback or 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 aaupdate@kpmg.com.
