The Companies (Auditor’s report) Order 2020 (CARO 2020) has introduced enhanced reporting requirements for auditors and companies. In our previous editions of the Accounting and Auditing Update (AAU) we have been focussing on various elements of CARO reporting. In this edition of AAU, we aim to discuss these reporting requirements relating to fraud reporting, whistle-blower complaints, unrecorded income disclosed in tax assessments and qualifications in audit reports. The article also points outs the guidance provided by the Institute of Chartered Accountants of India (ICAI) in these areas.
Climate change has emerged as an important area to focus. October 2020 edition of AAU highlighted how it is rapidly emerging as a threat to the stability of the financial systems across the globe. It explained the guidance issued by the Task Force on Climate-related Financial Disclosures (TCFD) and highlighted that the International Accounting Standards Board (IASB) and the International Auditing and Assurance Standards Board (IAASB) are also discussing this topic. Recently, the IASB has issued an education material which highlights some of the existing requirements in IFRS that would aptly reflect climate risks and other emerging risks in the financial statements. Our article on the topic summarises the education material and covers the financial disclosures to be considered by companies.
In order to promote the consistent application of IFRS and EU-specific reporting requirements, the European Securities and Markets Authority (ESMA) issues an annual public statement. This statement highlights the areas that it would be focusing on when reviewing listed companies’ annual report. Recently, ESMA issued its enforcement priorities for 2020 annual financial reports. These priorities cover transparent and timely disclosure of information on the effects of the pandemic on a company’s financial performance, position and cash flows. It covers areas like presentation of financial statements, leases, impairment of assets and financial instruments and disclosures. Additionally, ESMA also focussed on non-financial matters like climate change, business model and value creation and social and employee matters.
As is the case each month, we have also included a regular round-up of some recent regulatory updates in India.