Empowering You
'Today & Always'

India’s IT landscape has experienced a dramatic shift over recent decades, moving away from traditional, paper-dependent bookkeeping methods to a vibrant, tech-powered ecosystem. Today, organizations depend on — ranging from enterprise resource planning (ERP) tools to cloud platforms — not only to boost efficiency but also to safeguard compliance, security, and data accuracy of financial reporting. This change entails additional responsibility since keeping thorough records helps to prove financial integrity and responsibility. An audit trail acts as the "black box" of an organization—a kind of financial journal that captures every activity. It records who did what, when, and how within the financial system. This creates a straightforward way to verify the accuracy and accountability of financial records. Think of it as holding a backstage pass that lets you peek behind the curtain—offering complete visibility into every transaction for transparency, tracking access to sensitive data to bolster security, and capturing system changes to ensure compliance. With their growing importance, audit trails are now a legal must-have in India, following regulatory mandates that came into effect on April 1, 2023. The push for audit trail comes straight from the Companies (Accounts) Rules, 2014, where Rule 3(1) says any organization using accounting software—whether it's ERP systems or even web portals—must have a permanent audit trail that can't be turned off. It’s got to automatically track every change, stamp it with a timestamp, and keep those records on hand for audits. Meanwhile, auditors, under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014, must double-check that this feature was running all year, and wasn't tampered with. This rule isn't just for large organizations—it applies to every Indian organization. Whether it's nonprofits under Section 8 or foreign entities, it covers everything from standalone to consolidated financial statements.

Welcome to our Standard Setters' Updates of FASB & SEC. In this publication, we present a concise overview of the latest developments in financial reporting and highlight key considerations as we move through 2025. The Accounting Updates summarize FASB's new guidance issued in the first half of the current year and highlight the accounting standards that are effective in 2025. The FASB Current Projects section provides an overview and status of the items that FASB is actively working on. The Regulatory Updates section brings you noteworthy updates from the SEC. The Sustainability Reporting Developments section outlines the changes to ISSB’s Disclosure and European Union’s Reporting requirements. The Financial Accounting Standards Board (FASB), in November 2024, issued ASU 2024-03 which requires public business entities to disaggregate expenses in the income statement into specific categories and reconcile those to the totals reported in the financial statements. Subsequently, the Board realized a clarification was needed to avoid confusion regarding when the standard applies, particularly in interim periods. Therefore, the Board issued ASU 2025-01 clarifying the effective date to be the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. In 2022, the Securities and Exchange Commission (SEC) published interpretive guidance as Staff Accounting Bulletin (SAB) No. 121 on Topic 5.FF, Accounting for Obligations to Safeguard Crypto-Assets an Entity Holds for its Platform Users. SAB No. 121 required entities safeguarding crypto-assets to record a liability and a corresponding asset at fair value. However, this guidance created practical challenges and accounting complexities. To address these concerns, the SEC later issued SAB No. 122, rescinding the interpretive guidance published as SAB No. 121. The amendment removes the obligation to recognize a safeguarding liability and corresponding asset, instead directing entities to apply traditional loss contingency guidance under ASC 450-20: Loss Contingencies when accounting for obligations to safeguard crypto-assets. Therefore, the Board issued ASU 2025-02 to inform about SAB No. 122 rescinding the interpretive guidance in SAB No. 121. Entities should apply the rescission of Topic 5.FF on a fully retrospective basis in annual periods beginning after December 15, 2024.

In a dynamic and fast-paced global environment, organizations are navigating ever-increasing challenges driven by technological advancements, environmental demands, and changing societal expectations. These changes blur traditional risk boundaries and create a complex, interconnected risk landscape. As a result, it has become imperative for internal audit functions and organizations as a whole to develop the ability to identify, understand, and mitigate risks, enabling them to achieve resilient and sustainable growth. These emerging threats also provide internal audit teams with an opportunity to demonstrate agility, prudence, and strategic insights, thereby reinforcing their role in enhancing organizational resilience and long-term value creation. Business continuity risks are probable disruptions that hinder an organization's ability to operate effectively and deliver essential services. The disruptions may arise from multiple sources such as natural calamities, technological disruption, cybersecurity incidents, geopolitical conflicts, and supply chain disruptions. The COVID-19 pandemic or Suez Canal blockage were recent and powerful examples of how such risks can severely impact global operations. Continuity risks are highly interconnected and interdependent. A minor disruption in one part of the chain can trigger a domino effect, leading to operational and financial consequences globally. Thus, strengthening operational resilience is essential for maintaining stakeholder trust and sustaining long-term value delivery. Human capital risk is the vulnerability organizations encounter in attracting, retaining, and developing their talent. Employees are the most valuable assets and vital pillars of any organization. Failure to manage talent effectively can significantly impact business continuity, innovation, and competitive edge.

The importance of transparent financial reporting cannot be overstated in today's complex business environment. Investors, lenders, and other capital providers rely heavily on financial statements to evaluate an entity's performance, assess its prospects for future cash flows, and benchmark it against peers. A critical component of this evaluation is understanding the composition of expenses, as they often reveal key insights into cost structures, operational efficiencies, and long-term sustainability. Historically, U.S. GAAP has not required consistent disaggregation of income statement expenses, leading to diversity in reporting practices. This lack of standardization has posed challenges for users in comparing financial results across entities and industries. Recognizing this gap, the Financial Accounting Standards Board (FASB) introduced the proposed Accounting Standards Update (ASU) Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses in July 2023. After gathering extensive feedback through public comments and roundtable discussions, the FASB finalized the amendments in November 2024. These changes aim to enhance the decision-usefulness of financial reporting by requiring disaggregated expense disclosures within the footnotes of financial statements. In January 2025, FASB issued Accounting Standard Updates No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The updates apply to all public business entities and shall be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Securities and Exchange Board of India (SEBI) has introduced a new Industry Standard on "Minimum Information to be Provided for Review by the Audit Committee and Shareholders for Approval of Related Party Transactions (RPTs)." This standard, effective from April 1, 2025, applies to all listed entities in India and aims to standardize reporting and disclosure requirements, thereby elevating governance, transparency, and oversight of related party transactions (RPTs). The key requirements include ensuring accurate identification of all related parties as per Regulation 2(1)(zb) of SEBI’s LODR Regulations, 2015. Transactions must be classified based on materiality, distinguishing between material RPTs, transactions involving promoters or promoter groups exceeding prescribed thresholds, and residual RPTs outside the above categories. Internal auditors must verify that adequate documentation is maintained for each related party transaction (RPT), capturing all relevant details as applicable. This includes basic details of the related party, relationship and ownership of the related party, financial performance of the related party, details of previous transactions with the related party, amount of the proposed transactions, and basic details of the proposed transaction. Additional details must also be maintained for proposed transactions relating to the sale, purchase, or supply of goods or services, or any other similar business transaction; loans, inter-corporate deposits, or advances given by the listed entity or its subsidiary; investments made by the listed entity or its subsidiary; and guarantee (excluding performance guarantee), surety, indemnity, or comfort letter made or given by the listed entity or its subsidiary.

Explore how audits empower healthcare providers to tackle AI risks, policy shifts, and pricing reforms with confidence.