Economic volatility has continued in FY 2023-24, driven by high inflation, interest rates, and geopolitical issues, affecting various sectors globally. The accounting and regulatory changes during the year were reflective of these multifaceted global challenges. The uncertain economic outlook necessitates the entities to carefully assess the impact on their financial statements and consider whether additional financial information is needed in financial statement to ensure transparency and accuracy in financial reporting.
As we revisit FY 2023-24, it was notable for the introduction of several new rules, regulations and compliance obligations. These updates gave rise to an additional compliance and disclosure demands in financial statements. It is vital for the Companies to ensure the compliances of all the recent updates and key insights to financial reporting consideration to meet the expectations of users of financial statements.
A recent EY publication, “Year-end considerations: updates of standards, interpretations and regulatory considerations affecting financial statements”, aims to help companies make sense of the accounting and regulatory landscape that is relevant for FY 2023-24 and beyond. The publication consists of three sections:
Section 1 provides an overview of the key accounting changes as of 31 March 2024 and certain key amendments that are applicable for financial statements for the year-ended 31 March 2024 and beyond. Enumerating below the summary of key updates covered in this publication:
- Overview of key amendments to the Indian Accounting Standards (Ind AS): The Ministry of Corporate Affairs (MCA) in India has updated the Companies (Indian Accounting Standards) Rules, 2015, with notable amendments to Ind AS 1 (Presentation of Financial Statements), Ind AS 12 (Income Taxes), and Ind AS 8 (Accounting Policies, Changes in Accounting Estimates and Errors). These amendments came into effect for annual reporting periods starting on or after 1 April 2023 and are intended to enhance financial reporting quality and provide greater clarity to stakeholders and users of financial statements.
- Key Expert Advisory Committee (EAC) opinions: EAC has provided opinions on numerous accounting issues pertinent to statements of profit and loss and financial position, as well as the classification and presentation within financial statements. EAC advises that companies should undertake a comprehensive assessment of all relevant details and facts to ensure that the financial statements appropriately reflect the impact of these arrangements.
- IFRS Interpretations Committee Discussion (IFRS IC): The section covers IFRS IC discussion on:
- Disclosure of revenues and expenses for reportable segments [International Financial Reporting Standard (IFRS) 8, Operating Segments].
- Climate-related commitments [International Accounting Standard (IAS) 37 Provisions, Contingent Liabilities and Contingent Assets]
- Presentation and disclosures: In response to the evolving business landscape and the push for enhanced transparency in financial statements, regulatory bodies are emphasizing the significance of precise presentation and disclosures. Entities such as the Research Committee of The Institute of Chartered Accountants of India (ICAI), Financial Reporting Review Board (FRRB), and The National Financial Reporting Authority (NFRA) have released a number of clarifications, observations, and case studies during the year. It is aimed to guide companies to bring uniformity in presentation and disclosure of financial statements. The section also covers other critical frequently asked questions and how we see it.
On the other hand, section 2 provides a glance at the regulatory changes. The section covers amendments issued by The Securities and Exchange Board of India (SEBI) relating to Listing Obligations and Disclosure Requirements (LODR) Regulations. The recent amendment by SEBI mandates the listed entities and their management to conduct a comprehensive review of all matters that have not been previously disclosed. Considering the prescribed materiality thresholds, entities require reassessing to determine if these events / matters now warrant disclosure.
Lastly, section 3 summarizes key hot topics which may have a significant impact on the reporting for the financial year-ended 31 March 2024 and beyond. Some of the key topics covered in the publications are:
- Pillar Two Model accounting consideration.
- Key considerations for presentation of reverse factoring arrangement in the balance sheet, statement of cash flows and notes to the financial statements.
- Accounting consideration arising from geopolitical and economic uncertainty.
