ICAI Council clears new financial statement format for businesses; businesses may adopt by FY28
The Institute of Chartered Accountants of India (ICAI) has approved a new reporting format under Ind AS 118, bringing it one step closer to implementation, two persons aware of the development said.
ICAI will send the proposed new format to audit watchdog National Financial Reporting Authority (NFRA) for review; the format aims to overhaul how companies present revenue and expenses, offering greater clarity on core performance and return generation.
Also read: Businesses will soon have to file financial statements in a new format. Here's why.
If cleared, it will be sent to the ministry of corporate affairs for final sign-off, said one of the persons cited above, requesting anonymity. While a formal rollout date has yet to be announced, an April 2027 implementation is likely, in line with a similar global transition to IFRS 18.
Queries emailed on Thursday to the ministry of corporate affairs and NFRA remained unanswered at the time of publishing.
Council nod, next steps
ICAI's Council comprises elected chartered accountants as well as nominees from the government and other constitutional or regulatory bodies, including representatives of the Comptroller and Auditor General of India and the ministry of corporate affairs.
CA. Charanjot Singh Nanda, president of ICAI, told Mint in a statement that the proposed Ind AS 118 will mark a significant step forward in enhancing the quality and clarity of financial reporting in India.
'This standard is designed to improve how entities communicate financial performance, with a particular focus on the statement of profit and loss," said Nanda.
'While it does not alter the way financial performance is measured, it introduces a more structured and consistent approach to how that performance is presented and disclosed. The proposed standard will not affect how companies measure their financial performance and the overall profit figure. This will greatly benefit users of financial statements by enabling more meaningful comparisons and deeper insights into a company's operations," he explained.
Also read: ICAI tightens norms on tax audits accountants can accept
Three-part breakdown
The new format will require businesses to show all income and expenses in three defined groups: operating, which deals with the core business activities; investing activities dealing with returns or losses; and financing, which deals with items like interest paid or received, experts said quoting ICAI's exposure draft of Ind AS118 released earlier for public comments.
This structure is expected to help investors and regulators better assess performance in both core operations and auxiliary investment activities.
Another major change is the requirement to bring certain information—currently disclosed outside the financial statements in investor presentations, press releases, or management commentary—within the audited financials. These are often referred to as management-defined performance measures and will now fall under statutory audit scope.
Additionally, the format will mandate more granular disaggregation of income and expenses, with clearer disclosure of the nature of specific costs. These changes aim to improve the transparency, auditability, and comparability of financial statements, and will require preparers to be more precise in their reporting, they added.
Also read: Punish bankrupt company owners who don't cooperate in debt resolution, set up advance ruling to cut down delay: ICAI
Global alignment
The move is part of a broader global shift in financial reporting formats, aligning with International Financial Reporting Standard (IFRS) 18, which takes effect globally from January 2027.
However, India's timeline for adoption remains undecided. A likely implementation from April 2027 is possible, though the final decision will depend on discussions among ICAI, NFRA, and the government, the person cited above said.
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