Year-end considerations FY 2024-25: Navigating the evolving accounting landscape

Key financial reporting updates for FY 2024-25 to help organizations finalize their financial statements

In brief

• FY 2024-25 introduces several critical accounting and regulatory changes, including amendments to Ind AS, SEBI updates in Listing Obligations and Disclosure Requirements (LODR) and key Expert Advisory Committee (EAC) opinions.
• Regulators are increasingly concerned about the quality of financial statements. Understanding commonly observed pitfalls can help companies strengthen their financial statements.

As we transition into FY 2024-25, the financial reporting landscape continues to evolve with new challenges and regulatory shifts. It underscores the need for heightened transparency and provide required disclosures in financial statements. Embracing these changes will help companies not just improve compliance but is also an opportunity to strengthen financial reporting practices. 

While there are few accounting standard changes in FY 2024-25, companies are witnessing increased regulatory focus in areas of presentation and disclosures, climate change and sustainability considerations and governance. Companies need to fully comprehend the impact of these new accounting and regulatory changes and take a relook at their disclosures in financial statements to meet regulators and investor’s expectation. 

As companies gear up to finalize their financial statements for the year ended 31 March 2025, it is critical that they evaluate all key changes in accounting and regulatory space which impact their financial reporting practices.

Our EY publication, ‘Year-end considerations: Updates of standards, interpretations and regulatory considerations affecting financial statements’, aims to help companies understand the accounting and regulatory landscape relevant for FY 2024-25 and beyond. The publication consists of three sections:

Section 1 provides an overview of the key accounting changes up to 31 December 2024 and certain key amendments that are applicable for financial statements for the year ended 31 March 2025 and beyond. Mentioned below is 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) has introduced key amendments to the Companies (Indian Accounting Standards) Rules, 2015, effective 1 April 2024, affecting Ind AS 117 (Insurance Contracts) and Ind AS 116 (Leases). Ind AS 117 expands insurance contract accounting to include non-insurance entities with insurance-like contracts, while Ind AS 116 clarifies the treatment of sale and leaseback transactions with variable lease payments.

• Key Expert Advisory Committee (EAC) opinions: EAC has provided opinions on numerous accounting issues pertinent to Statements of Profit and Loss and balance sheet, as well as the classification and presentation within financial statements. 

• Key topics from IFRS perspective: This section explores several key discussions and amendments under the International Financial Reporting Standards (IFRS). It covers the IFRS Interpretations Committee (IFRS IC) guidance on Disclosure of Revenues and Expenses for Reportable Segments (IFRS 8, Operating Segments) and Climate-related commitments [International Accounting Standard (IAS) 37 Provisions, Contingent Liabilities and Contingent Assets]. Additionally, the section discusses recent amendments to IFRS 7, IFRS 9, and IAS 1.

• Presentation and disclosures: As the business environment continues to evolve, the push for greater transparency in financial reporting has led regulatory bodies to emphasize the importance of precise presentation and disclosure requirements. The Research Committee of the Institute of Chartered Accountants of India (ICAI) has compiled the pitfalls that were commonly observed as a roadblock for a company to strengthen financial reporting practices in the form of a publication ‘Commonly Found Errors in Reporting Practices’. These efforts aim to assist companies in ensuring consistency and clarity in their financial statements. Further, the section also covers the key accounting considerations from the perspective of climate related disclosures and Pillar Two Model.

Section 2 outlines key regulatory changes by the Securities and Exchange Board of India (SEBI) up to 31 December 2024 and few key regulatory updates post 31 December 2024. It covers changes to the SEBI Listing Obligations and Disclosure Requirements (LODR) and Issue of Capital and Disclosure Requirements (ICDR) regulations. Further, the section includes critical SEBI regulatory updates such as market rumour verification requirements, the Business Responsibility and Sustainability Reporting (BRSR) and discussion on industry standards for minimum information to be provided to the Audit Committee and shareholders for approval of Related Party Transactions.

Lastly, Section 3 summarizes key hot topics that may have a significant impact on the reporting for the financial year ended 31 March 2025 and beyond. Some of the key topics covered are:

• Purchase consideration in business combinations in connection with employment services (ESOP versus contingent considerations)
• Key considerations related to accounting for payments received from suppliers and related disclosures
• IFRS 18: Presentation and related potential changes
• An overview of key accounting implications arising from recent amendments in the Income-tax Act