Accounting Advisory

The first half of 2026 produced significant accounting, regulatory, and sustainability reporting activity. FASB issued two new Accounting Standards Updates in Q2 and identified several standards now effective for 2026 reporting periods. The SEC proposed the most significant structural change to periodic reporting in approximately 75 years. The PCAOB transitioned to new leadership and confirmed the December 2026 effective date for QC 1000. The ISSB advanced its nature-related disclosure framework. This edition consolidates the most significant H1 2026 developments into one practical reference for finance teams, audit committees, and accounting professionals. Download the H1 2026 Standard Setters Publication (PDF) FASB: New ASUs and Standards Effective in 2026 No new ASUs were issued in Q1 2026. Q2 produced two updates directly relevant to finance and reporting teams. ASU 2026-01 (Paid-in-Kind Dividends on Equity-Classified Preferred Stock, April 2026) provides authoritative guidance on how issuers should initially measure paid-in-kind (PIK) dividends on equity-classified preferred stock, requiring measurement based on the PIK dividend rate stated in the preferred stock agreement. Prior to this, US GAAP lacked explicit guidance, producing inconsistency in practice. Effective for annual periods beginning after December 15, 2026, with early adoption permitted. [1] ASU 2026-02 (Environmental Credits and Environmental Credit Obligations, Topic 818, May 2026) establishes recognition, measurement, presentation, and disclosure requirements for entities that generate, purchase, or receive environmental credits, or have regulatory compliance obligations settleable with environmental credits. This is particularly relevant for organisations in carbon markets, renewable energy certificate regimes, and voluntary offset programmes. [2] Standards effective for December 31, 2026 year-ends. Several existing ASUs reach their mandatory effective dates for calendar year-end public entities in 2026, covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation. Finance teams should confirm implementation readiness for each. [3] Pierag's Accounting Advisory practice assists organisations with new standard adoption and technical accounting implementation under US GAAP and IFRS. The H2 2025 Standard Setters Update covers earlier ASUs that feed into 2026 effective date planning. SEC: Semiannual Reporting Proposal and Ongoing Reform On 5 May 2026, the SEC proposed amendments allowing public companies to elect semiannual reporting on a new Form 10-S rather than filing three quarterly reports on Form 10-Q. [4] The proposal is described as the most significant structural change to US public company periodic reporting in approximately 75 years. Companies electing semiannual reporting would file one Form 10-S and one Form 10-K annually. The comment period closed on 6 July 2026, and a final rule has not yet been issued. CFOs and audit committees should begin assessing whether a transition to semiannual reporting aligns with investor expectations, analyst coverage implications, and contractual reporting obligations. Key considerations include the impact on analyst coverage, comparability challenges in a mixed market of quarterly and semiannual filers, and review of debt covenants or credit agreements that reference quarterly reporting obligations. [5] The SEC's broader H1 2026 regulatory agenda also covers capital raising updates, foreign private issuer disclosures, private fund reporting, investment company developments, and market structure reform. PCAOB: New Chair, Reduced Budget, and December 2026 Standards In February 2026, the SEC appointed Demetrios (Jim) Logothetis as PCAOB Chair. [6] The SEC approved a reduced PCAOB budget for FY2026. QC 1000, the firm quality control standard postponed by one year in August 2025, remains on track for its December 15, 2026 effective date. AS 2901 and related standards take effect on the same date. Audit committees should engage with external auditors to confirm QC 1000 implementation readiness for H2 2026. ISSB and Ongoing FASB Projects The ISSB advanced its nature-related disclosure project in H1 2026, tentatively deciding to develop requirements in the form of an IFRS Practice Statement rather than a new standalone standard. [7] FASB's active project pipeline includes crypto asset transfers, private credit disclosures, commodities, transferable tax credits, debt exchanges, digital assets, and hedge accounting. Finance teams should monitor these projects for exposure drafts and comment periods that may affect future reporting policies. Frequently Asked Questions What FASB standards were issued in H1 2026? ASU 2026-01 on paid-in-kind dividends on equity-classified preferred stock, issued April 2026, and ASU 2026-02 on environmental credits and environmental credit obligations, issued May 2026. No ASUs were issued in Q1 2026. [1][2] What is the SEC semiannual reporting proposal? Proposed on 5 May 2026, it allows public companies to elect semiannual Form 10-S filings instead of three quarterly Form 10-Q filings. The comment period closed 6 July 2026, and a final rule has not been issued. [4] When does PCAOB QC 1000 take effect? December 15, 2026, following a one-year postponement. AS 2901 and related standards take effect on the same date. [6] Where can I find the H2 2025 Standard Setters Update? The H2 2025 edition is available in Pierag's Insights hub. References [1] Eide Bailly LLP. (2026, July 20). 2026 Accounting Standards Updates Issued and Applicable Now. Retrieved from https://www.eidebailly.com/insights/alerts/2026/2026-accounting-standards-updates [2] Securities and Exchange Commission. (2026, May 5). SEC Proposes Amendments to Permit Optional Semiannual Reporting by Public Companies [Press release]. Retrieved from https://www.sec.gov/newsroom/press-releases/2026-42-sec-proposes-amendments-permit-optional-semiannual-reporting-public-companies [3] Sidley Austin LLP. (2026, June 8). SEC Proposes Optional Semiannual Reporting Regime: What Companies Should Consider Now. Retrieved from https://www.sidley.com/en/insights/newsupdates/2026/05/sec-proposes-optional-semiannual-reporting-regime-practical-considerations [4] Riveron. (2026, June 12). Q1 2026 Accounting Advisory Guide: Navigating FASB Developments, SEC Reform, and Leadership Trends. Retrieved from https://riveron.com/q1-2026-accounting-advisory-guide/ [5] International Sustainability Standards Board. (2026, June). ISSB Update - June 2026. IFRS Foundation. Retrieved from https://www.ifrs.org/news-and-events/updates/issb/2026/issb-update-june-2026/

Research report | 8-10 Min Read The National Financial Reporting Authority has moved from a reactive enforcement body into something closer to an active quality regulator. Inspection volume is rising, findings are getting more granular, and NFRA is now testing AI tools to support its own review process. For audit firms and the audit committees that rely on them, understanding what NFRA is actually finding matters more than understanding that NFRA exists. This report reviews recent NFRA inspection findings and outreach activity through 2026 to identify the recurring gaps in Indian audit practice and what they signal for audit firms, boards, and finance leaders preparing for their next inspection cycle. What Is an NFRA Inspection? NFRA inspections are structured reviews of how an audit firm actually performs its work, not just what its policies say. Inspectors check whether the firm follows auditing standards, maintains genuine independence from the client, applies proper quality control procedures, and can produce documentation that supports the judgments made during the audit. Inspection reports are made public, which means findings function as both enforcement outcomes and a public signal to the rest of the audit profession about where scrutiny is concentrated. NFRA has stated it will complete inspections of ten audit firms in FY26, the highest annual figure in the regulator's history, alongside a series of city-based outreach programs launched from September 2025 to engage smaller and mid-tier firms directly rather than waiting for inspection findings to force the conversation. What Recent Inspections Reveal Across recent public NFRA inspection reports, a consistent set of themes recurs regardless of firm size: Auditor independence gaps, particularly around cross-network service provisions and undisclosed relationships between auditors and clients. Independence policy manuals that are not updated between inspection cycles remain a repeated finding. Related party transaction (RPT) documentation weaknesses, including insufficient verification of RPT disclosures and inadequate arm's length price testing. Revenue recognition deficiencies, where audit evidence does not sufficiently support the judgments applied to complex or unusual revenue arrangements. Internal financial control gaps, especially concerning controls over revenue, related party transactions, and impairment of non-financial assets. Documentation and evidence chain weaknesses, where audit files lack the contemporaneous, unambiguous evidence needed to demonstrate that professional scepticism was actually applied, not just procedurally recorded. From Reactive Enforcement to Proactive Oversight NFRA's historical approach centred on issuing inspection reports after the fact, flagging shortcomings, and applying penalties or sanctions where warranted. That model is shifting. NFRA's outreach programs, starting in Hyderabad and Indore, signal a deliberate move toward engaging firms before problems surface in an inspection, without reducing enforcement activity. NFRA has also indicated it is testing AI tools internally to support faster review of financial statements, flag questionable transactions, and improve the consistency of its own oversight process, while stating that explainability remains a core requirement rather than a black box approach. This shift matters for how audit firms should read NFRA's direction. Enforcement is not softening. It is becoming better resourced, more consistent, and harder to treat as a low-probability event. What This Means for Audit Firms Firms preparing for the current inspection cycle should treat the following as priority areas, based on where NFRA's public findings have concentrated: Revisit independence policies and confirm they reflect any changes advised in prior inspection cycles, not just the version on file at the time of the last review Strengthen documentation practices around related party transactions, including arm's length testing evidence Ensure audit files demonstrate the reasoning behind judgments on revenue recognition and estimates, not just the conclusion reached Review internal quality control procedures for consistency across engagement teams, since NFRA's outreach explicitly targets smaller and mid-tier firms that may lack Big Four-level resourcing Treat group audits with cross-border components as higher scrutiny areas, since NFRA's push has direct implications for how Indian component teams support foreign group auditors What This Means for Audit Committees and Finance Leaders For companies rather than audit firms, NFRA's tightening oversight has a direct read-through. A cleaner audit relationship starts with the underlying data and documentation a company provides, not only with the auditor's own procedures. Audit committees should expect: More detailed documentation requests from auditors around related party transactions and revenue recognition support Closer scrutiny of internal controls over financial reporting, particularly where prior audits have flagged deficiencies Longer lead times are built into the audit timeline as firms adjust to more rigorous internal quality reviews ahead of their own NFRA inspections Companies that treat audit readiness as a year-round discipline, rather than a pre-audit scramble, are consistently better positioned when NFRA's tightening standards flow through to the audit relationship. Frequently Asked Questions What is NFRA, and what does it inspect? NFRA is India's National Financial Reporting Authority. It conducts structured inspections of audit firms to check compliance with auditing standards, independence requirements, and quality control procedures, and publishes its findings publicly. What are the most common findings in NFRA inspection reports? Recent public inspection reports show recurring findings in auditor independence, related party transaction documentation, revenue recognition evidence, internal financial controls, and the completeness of audit documentation. How many audit firms does NFRA inspect each year? NFRA has stated it will complete inspections of ten audit firms in FY26, its highest annual number to date, alongside targeted outreach to smaller and mid-tier firms. Is NFRA's approach becoming stricter or more collaborative? Both. NFRA is expanding proactive outreach programs to engage firms before issues surface in an inspection, while continuing full enforcement activity, including inspections and penalties, without reducing scrutiny. Does NFRA's increased inspection activity affect companies, not just audit firms? Yes. As auditors face more rigorous NFRA scrutiny, companies typically see more detailed documentation requests and closer review of internal controls during their own audit engagements. Who should read NFRA inspection insights like this? Audit partners, audit committee members, CFOs, controllers, and internal audit leaders are responsible for audit readiness and the quality of financial reporting oversight. Get the Full Report This overview covers the confirmed public themes in NFRA's recent inspection activity. The complete report includes detailed analysis of specific inspection findings, firm-level patterns, and practical audit readiness recommendations for management teams, audit committees, and internal audit leaders. Related reading: Material Weakness Trends 2026 | Beyond Compliance: Internal Auditor's Role in Implementing SEBI's New RPT Framework | Audit Trail: Ensuring Financial Integrity and Accountability

Managing regulatory compliance in India requires more than good intentions. Across Income Tax, GST, FEMA, MCA, SEZ, and STPI, the volume of filing obligations a business must track each financial year runs into dozens of deadlines that overlap, shift, and carry penalty consequences that compound quickly. For finance teams and business owners, missing a single due date is a measurable liability, not an administrative oversight. Pierag has published a Compliance Calendar for FY 2026-27 to help organisations plan, track key deadlines, and build proactive reminders directly into their workflow. Download the FY 2026-27 Compliance Calendar (PDF) Why Compliance Planning Must Start Before the Deadline Regulatory frameworks in India are layered and dynamic. The Income Tax Act, the GST regime, the Companies Act administered by MCA, FEMA, and sector-specific schemes like SEZ and STPI each operate on independent filing cycles. A business active across even two or three of these regimes is managing compliance obligations almost every month of the year. The cost of missing deadlines goes well beyond penalty amounts. Late GST filings attract interest at 18 percent per annum on outstanding tax. Repeated defaults draw audit scrutiny and invite notices. MCA filing lapses can result in director disqualification. FEMA violations carry compounding consequences under the Enforcement Directorate. What appears to be a procedural failure is, at its core, a governance failure with financial and reputational consequences. A structured compliance calendar converts this complexity into a workable monthly schedule. It creates clear ownership across teams, reduces last-minute preparation errors, and gives leadership visibility into the organisation's compliance posture at any point in the year. Income Tax Obligations in FY 2026-27 Advance tax instalments are due on June 15, September 15, December 15, and March 15. TDS deposit and return filing obligations recur monthly and quarterly throughout the year. Annual return deadlines fall in July for non-audit cases and October for audit cases. Entities with international transactions carry additional transfer pricing documentation and Form 3CEB filing requirements. Amendments introduced in the Finance Act 2025 affecting depreciation blocks, presumptive taxation thresholds, and capital gains treatment add further complexity to FY 2026-27 computations. Teams that have not already reviewed how these changes affect their tax positions are already behind. GST Filing Deadlines That Repeat Every Month GST is the highest-frequency compliance obligation for most Indian businesses. GSTR-1 for outward supplies is due monthly for taxpayers with turnover above five crore rupees, and quarterly under the QRMP scheme for those below that threshold. GSTR-3B follows a parallel cycle. The annual GSTR-9 return and GSTR-9C reconciliation statement are due by December 31 for the prior financial year. Businesses with e-commerce transactions, reverse charge supplies, or imported services carry additional filing requirements that a general compliance checklist often misses. These need to be mapped explicitly at the start of the year. FEMA, RBI, and MCA: The Filings Businesses Most Commonly Miss FEMA and RBI Reporting For businesses with foreign investment or cross-border transactions, FEMA compliance is continuous. Annual Performance Reports for overseas direct investments, Foreign Liabilities and Assets returns due by July 15, and ECB reporting obligations are all time-bound. Entities receiving foreign investment must file FC-GPR within 30 days of allotment and keep FIRMS reporting current. The RBI has intensified monitoring of delayed filings, and late submission compounding applications have increased sharply since 2024. MCA and Companies Act Annual return in MGT-7 and financial statements in AOC-4 are due within 60 days of the AGM, placing them in September and October for most companies. Director KYC in DIR-3 KYC must be completed by September 30 each year. LLPs carry separate obligations including Form 8 and Form 11, with distinct deadlines from those applying to private limited companies. SEZ and STPI Compliance Is Not Optional Units in Special Economic Zones or registered under STPI must submit quarterly performance reports, annual performance reports, and softex filings for software exports. These obligations sit entirely outside the standard GST and Income Tax calendar and are frequently underprepared. For companies whose export-linked tax benefits depend on scheme compliance, lapsed filings can trigger benefit recovery proceedings with a direct impact on profitability. The Pierag FY 2026-27 Compliance Calendar is built for planning, with deadlines structured for direct Outlook calendar integration and team-level ownership. Finance teams that begin preparation two to three weeks before each deadline consistently outperform those working backwards from the due date. Compliance in India rewards organisations that treat it as a continuous process rather than a periodic event.

In December 2025, FASB issued ASU 2025-10, Government Grants (Topic 832), introducing dedicated US GAAP guidance for the accounting of government grants received by business entities. Before this update, US GAAP lacked a specific standard for government grants, leading companies to apply analogies to IAS 20, ASC 450, or Subtopic 958-605. This resulted in inconsistent accounting practices and reduced comparability across financial statements. [1] ASU 2025-10 establishes a structured framework for recognising, measuring, presenting, and disclosing government grants, improving transparency and comparability in financial reporting. Download the Pierag Technical Note on ASU 2025-10: Government Grant Accounting (PDF) Scope: Who Does ASU 2025-10 Apply To? Topic 832 applies to business entities receiving government grants and excludes not-for-profit organisations and employee benefit plans, which follow separate accounting guidance. [2] Several transaction types are also excluded from scope, including income tax benefits, government guarantees, and below-market interest rate loans. Finance teams should assess whether their specific grant arrangements fall within the scope of Topic 832 or continue to be accounted for under other applicable guidance. Grant Classification: Asset-Related and Income-Related ASU 2025-10 categorises government grants into two primary types, each with its own recognition and presentation requirements. [2] Asset-related grants are linked to the purchase, construction, or development of long-lived assets. Two accounting approaches are permitted. The Deferred Income Approach records the grant as deferred income at recognition, with the deferred amount recognised as income on a systematic basis over the useful life of the related asset. The Cost Accumulation Approach reduces the carrying amount of the asset by the grant amount, which results in lower depreciation charges over the asset's useful life rather than separate income recognition. Entities must select and consistently apply one approach for each class of asset-related grant. The chosen approach must be disclosed as part of the entity's accounting policy. [3] Income-related grants are intended to compensate for specific expenses incurred or losses suffered, or to provide general financial support. These grants are recognised as income in the period in which the related expenses are incurred, or losses are suffered. Income-related grants cannot be recognised before the related expense or loss is recognised. [2] Recognition and Measurement Grants are recognised only when it is probable that the entity will comply with the grant conditions and that the grant will be received. [2] This probable threshold prevents premature recognition and aligns the standard with the principle that grant income should reflect genuine compliance progress rather than anticipated receipt. Grants must generally be measured at fair value at the date of recognition. For non-monetary grants, such as land or equipment provided by a government body, fair value measurement applies to both the grant and the non-monetary asset received. [3] Enhanced Disclosure Requirements ASU 2025-10 introduces expanded disclosure requirements designed to give financial statement users a clear view of an entity's government grant activity and associated risks. [2] Required disclosures include the nature, terms, and conditions of significant grants, the accounting policies applied, the amounts recognised in the financial statements, contingencies or performance conditions attached to grants, and the risk and timing of any potential repayment obligations. These disclosure requirements apply regardless of which accounting approach is selected for asset-related grants. Finance teams should assess whether their current disclosure processes and internal documentation practices can support the level of granularity required. Pierag's Accounting Advisory practice assists organisations in assessing the impact of ASU 2025-10 on accounting policies, financial statement presentation, and disclosure frameworks. Effective Date and Transition ASU 2025-10 is effective for public business entities for fiscal years beginning after December 15, 2026, and for all other entities for fiscal years beginning after December 15, 2027. [1] Early adoption is permitted. Entities may apply the standard prospectively or retrospectively. For organisations receiving significant government grants related to clean energy incentives, infrastructure investment, advanced manufacturing, and research and development programmes, early assessment of ASU 2025-10's impact on accounting policy selection and financial statement presentation is advisable well ahead of the mandatory effective date. Frequently Asked Questions What did US GAAP require for government grants before ASU 2025-10? There was no dedicated US GAAP standard. Companies applied analogies to IAS 20, ASC 450, or Subtopic 958-605, resulting in diverse and inconsistent accounting practices across reporting entities. [1] Does ASU 2025-10 apply to non-profit organisations? No. Topic 832 applies only to business entities. Not-for-profit organisations and employee benefit plans follow separate accounting guidance and are excluded from scope. [2] What are the two accounting approaches for asset-related grants? The Deferred Income Approach recognises the grant as income over the useful life of the related asset. The Cost Accumulation Approach reduces the carrying amount of the asset, resulting in lower depreciation. Entities must select and consistently apply one approach per class of asset-related grant and disclose their chosen policy. [2][3] When is ASU 2025-10 effective? For public business entities, fiscal years beginning after December 15, 2026. For all other entities, fiscal years beginning after December 15, 2027. Early adoption is permitted. [1] Are all government grants in scope of Topic 832? No. Income tax benefits, government guarantees, and below-market interest rate loans are excluded from the scope of Topic 832, even when provided by a government entity. [2] References [1] FASB. (2025, December). Accounting Standards Update 2025-10: Government Grants (Topic 832) - Recognition, Measurement, Presentation, and Disclosure [Full text]. Retrieved from https://fasb.org/page/ShowPdf?path=ASU2025-10.pdf [2] CPA Hall Talk. (2026). ASU 2025-10 government grants: New Topic 832 recognition, measurement, and disclosure requirements. Retrieved from https://www.cpahalltalk.com/government-grants/ [3] Eide Bailly LLP. (2026). ASU 2025-10: What entities need to know about the new government grant accounting standard under Topic 832. Retrieved from https://www.eidebailly.com/insights/articles/2026/asu-2025-10-government-grants

The second half of 2025 produced significant activity across all four major standard-setting bodies. FASB issued multiple Accounting Standards Updates covering credit losses, internal-use software, government grants, and derivatives. The SEC underwent a leadership transition and issued new guidance on crypto assets. The PCAOB postponed its firm quality control standard by one year. European regulators materially simplified sustainability reporting obligations under ESRS. This edition consolidates the most significant H2 2025 developments into one practical reference for finance teams, audit committees, and accounting professionals preparing for 2026. Download the H2 2025 Standard Setters Publication (PDF) FASB: New ASUs on Credit Losses, Internal-Use Software, and Government Grants FASB issued multiple Accounting Standards Updates in H2 2025, with three particularly significant for FY2026 implementation planning. ASU 2025-05 (Credit Losses, July 2025) provides an optional practical expedient under the CECL model, allowing entities to assume current macroeconomic conditions at the balance sheet date will not change over the remaining life of short-term accounts receivable and contract assets from ASC 606 transactions. Effective for periods beginning after December 15, 2025. [1] ASU 2025-06 (Internal-Use Software, September 2025) modernises the capitalisation framework under Subtopic 350-40 by removing the project-stage model. Capitalisation begins when management has authorised and committed to the project, and completion is probable. Effective for annual periods beginning after December 15, 2027, with early adoption permitted. [2] ASU 2025-10 (Government Grants, December 2025) establishes authoritative US GAAP guidance for government grants for the first time, replacing the prior practice of applying IAS 20 by analogy. It provides a consistent recognition, measurement, and presentation framework for asset-related and income-related grants. [3] FASB also continued its simplification and consistency agenda across H2 2025, covering debt exchanges, environmental credit programmes, crypto asset transfers, equity method improvements, and cash flow statement refinements. Finance teams should consult the effective-date appendices in the full publication to identify which ASUs require action for December 31, 2025 and December 31, 2026, year-ends. Pierag's Accounting Advisory practice assists organisations with new standard adoption and technical accounting implementation. SEC: Leadership Transition, SAB 122, and Crypto Task Force Paul Atkins was sworn in as the 34th SEC Chair on 21 April 2025 following the resignation of Chair Gary Gensler in January 2025. [4] The SEC issued Staff Accounting Bulletin No. 122 on 30 January 2025, rescinding the prior SAB 121 guidance on crypto asset safeguarding obligations and directing entities to apply existing contingency accounting standards under ASC 450-20. [5] Finance teams with crypto balance sheet exposure should confirm their accounting and disclosure treatment reflects the updated SEC position. The SEC also established a Cyber and Emerging Technologies Unit focused on fraud committed using AI and machine learning, signalling increased scrutiny of AI-related disclosures and internal control design for companies deploying AI in financial reporting workflows. PCAOB: QC 1000 Postponed to December 2026 On 28 August 2025, the PCAOB postponed its firm quality control standard QC 1000 by one year, moving the effective date to December 15, 2026. [6] The postponement covers QC 1000 and all related standards, including AS 2901, AS 1215, AS 1220, AS 2101, and AS 2110. Existing interim standards remain in force until December 15, 2026. Audit committees should engage with external auditors to understand implementation readiness and timeline implications for FY2025 and FY2026 audits. Sustainability Reporting: ESRS Simplification and ISSB Developments The European Commission issued revised European Sustainability Reporting Standards that substantially reduce mandatory data points and introduce a value chain cap restricting what large companies can require from supply chain partners with 1,000 or fewer employees. For multinational organisations and Indian companies with EU market exposure, this changes the CSRD compliance baseline for FY2027 filings onwards. The ISSB continued its work programme, including SASB Standards enhancement exposure drafts and progress on nature-related disclosure requirements.  Frequently Asked Questions What are the most important FASB ASUs from H2 2025? ASU 2025-05 on credit losses, ASU 2025-06 on internal-use software, and ASU 2025-10 on government grants. Effective dates vary and are detailed in the full publication. [1][2][3] What did the PCAOB QC 1000 postponement mean? The effective date moved to December 15, 2026, giving audit firms additional time to implement risk-based quality control systems. Existing interim standards remain in force until that date. [6] What changed at the SEC in H2 2025? Paul Atkins was sworn in as SEC Chair. SAB 122 rescinded SAB 121's crypto safeguarding guidance. A Crypto Task Force was launched, and a new Cyber and Emerging Technologies Unit was established. [4][5] How does ESRS simplification affect CSRD filers? Revised ESRS reduce mandatory data points and limit what large companies can require from smaller supply chain partners. Companies preparing for mandatory CSRD filings from FY2027 should reassess their disclosure scope. References [1] SEC EDGAR. (2025). ASU 2025-05: Financial Instruments - Credit Losses (Topic 326) [Registrant disclosure, 10-Q]. Retrieved from https://www.sec.gov/Archives/edgar/data/1069878/000119312525264987/R12.htm [2] FASB. (2025, September). ASU 2025-06: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements [Full text]. Retrieved from https://storage.fasb.org/ASU%202025-06.pdf [3] FASB. (2025, December). ASU 2025-10: Government Grants (ASC 832). Summary retrieved from https://dart.deloitte.com/USDART/home/publications/deloitte/heads-up/2025/asc-832-fasb-guidance-accounting-for-government-grants [4] Armstrong Teasdale. (2025, May 2). New era at the SEC: Key priorities under Chair Paul Atkins. Retrieved from https://www.armstrongteasdale.com/thought-leadership/new-era-at-the-sec-key-priorities-under-chair-paul-atkins/ [5] Securities and Exchange Commission. (2025, January 30). Staff Accounting Bulletin No. 122 rescinding SAB 121. Retrieved from https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125 [6] PCAOB. (2025, August 28). PCAOB postpones effective date of QC 1000 and related standards to December 15, 2026 [Press release]. Retrieved from https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-postpones-effective-date-of-qc-1000-and-related-standards--rules--and-forms

In September 2025, FASB issued ASU 2025-06, Intangibles, Goodwill and Other, Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The update is one of the most significant software cost accounting changes in years, driven by a fundamental mismatch between the prior guidance and how software is actually developed today. With agile and iterative development now the norm, the older sequential stage-based model no longer reflected technological reality. ASU 2025-06 modernises the standard by replacing the prescriptive project-stage framework with a principles-based threshold that aligns with how modern software projects are actually structured and executed. [1] Download the Pierag Technical Note on ASU 2025-06: Internal-Use Software Accounting (PDF) The Four Core Changes Under ASU 2025-06 Removal of the project-stage model. All references to the preliminary project stage, application development stage, and post-implementation and operation stage are removed from Subtopic 350-40. [1] Entities are no longer required to track which stage a software project is in or determine whether specific activities fall within capitalisation-eligible stages. This eliminates the primary source of inconsistency in the prior guidance. Introduction of the probable-to-complete threshold. An entity must capitalise internal-use software costs only when two conditions are simultaneously met: management has authorised and committed to funding the project, and the project will probably be completed and used for its intended function. [2] This principles-based threshold replaces the stage-determination exercise with a management-level commitment and probability assessment. Evaluation of Significant Development Uncertainty (SDU). To assess whether completion is probable, entities must evaluate whether Significant Development Uncertainty exists. SDU is present when the software includes novel, unique, or unproven features not yet validated through coding and testing, or when significant performance requirements remain undefined or subject to substantial revision. [2] When SDU exists, the probable-to-complete threshold is not met, and capitalisation must be deferred until the uncertainty is resolved. Alignment with PP&E disclosure requirements. The disclosure requirements of Subtopic 360-10, Property, Plant, and Equipment, now apply to all capitalised internal-use software costs under Subtopic 350-40, regardless of balance sheet presentation. [3] Entities must disclose capitalised internal-use software costs, accumulated amortisation at the balance sheet date, amortisation for the period, and the amortisation method used. This alignment reduces diversity in reporting practice and improves transparency. Website Development Costs and Effective Date ASU 2025-06 also consolidates prior website development cost guidance from Subtopic 350-50 into the broader internal-use software framework under Subtopic 350-40. [1] The legacy distinctions between website development costs and other internal-use software costs are removed, affecting technology companies, e-commerce businesses, and financial services firms with significant website development spend. The standard is effective for all entities for annual reporting periods beginning after December 15, 2027. For calendar year-end entities, mandatory application begins 1 January 2028. [3] Early adoption is permitted using prospective, retrospective, or modified transition approaches. FASB noted that for most software types, capitalisation outcomes will not change significantly. The primary impact is on entities developing novel or complex software where Significant Development Uncertainty is present. Pierag's Accounting Advisory practice assists finance teams and technology leaders in assessing the impact of ASU 2025-06 on software capitalisation policies, disclosure frameworks, and financial reporting systems ahead of the 2028 effective date. Frequently Asked Questions When is ASU 2025-06 effective? For all entities, annual reporting periods beginning after December 15, 2027. For calendar year-end entities, this is 1 January 2028. Early adoption is permitted using prospective, retrospective, or modified transition approaches. [3] Does ASU 2025-06 change how most software costs are accounted for? No. FASB stated capitalisation outcomes will not change significantly for most software. The primary impact is on novel or complex software where SDU exists and on those whose prior stage-based practices produced inconsistent results. [1] What is Significant Development Uncertainty? SDU exists when software includes novel, unique, or unproven features not yet validated through coding and testing, or when significant performance requirements remain undefined or subject to substantial revision. Capitalisation must be deferred until SDU is resolved. [2] Does ASU 2025-06 affect website development costs? Yes. Website development costs previously governed by Subtopic 350-50 are consolidated into Subtopic 350-40, eliminating separate guidance for website costs. [1] What are the new disclosure requirements? Entities must disclose capitalised internal-use software costs, accumulated amortisation, amortisation for the period, and the amortisation method, applying ASC 360-10 disclosure standards regardless of balance sheet presentation. [3] References [1] FASB. (2025, September). ASU 2025-06: Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements [Full text]. Retrieved from https://storage.fasb.org/ASU%202025-06.pdf [2] Sensiba. (2025, December 17). ASC 350-40 update: Understanding ASU 2025-06 for internal-use software capitalisation. Retrieved from https://sensiba.com/resources/alerts/fasb-issues-new-guidance-for-software-development-costs/ [3] Eide Bailly LLP. (2025, December 1). Understanding ASU 2025-06: What entities need to know about accounting for internal-use software. Retrieved from https://www.eidebailly.com/insights/articles/2025/12/asu-2025-06

Standard Setters' Updates | 6-8 Min Read Two developments from the Financial Accounting Standards Board and the Securities and Exchange Commission carry direct implications for how companies prepare their financial statements heading into 2026 and 2027 reporting cycles. One clarifies exactly when new expense disaggregation rules kick in. The other removes a balance sheet requirement that had created real accounting complexity for companies holding crypto assets on behalf of clients. Both are worth understanding now, well ahead of their effective dates, rather than during the crunch of year-end close. ASU 2025-01: When Expense Disaggregation Disclosures Actually Apply In November 2024, FASB issued ASU 2024-03, which requires public business entities to disaggregate expenses in the income statement into specific categories and reconcile those figures back to the totals already reported in the financial statements. The intent is straightforward: give investors and analysts more visibility into what actually makes up a company's cost base, rather than leaving broad expense line items unexplained. After the standard was issued, FASB recognized that the original effective date created confusion, particularly around how the requirement applied to interim reporting periods. To resolve this, the Board issued ASU 2025-01, which clarifies the effective date as follows: Annual reporting periods: beginning after December 15, 2026 Interim reporting periods: within annual reporting periods beginning after December 15, 2027 In practice, this means most public business entities have a longer runway than the original standard implied, but the clarification also removes any ambiguity about when the clock actually starts. Finance teams should treat this as a data infrastructure question now, not a disclosure question later, since building the systems to track and reconcile disaggregated expense categories takes considerably longer to implement well than to disclose. ASU 2025-02: The SEC Reverses Course on Crypto-Asset Safeguarding The second development traces back to 2022, when the SEC published Staff Accounting Bulletin (SAB) No. 121 under Topic 5.FF, covering how entities should account for obligations to safeguard crypto assets held on behalf of platform users. SAB 121 required entities in this position to record both a liability and a corresponding asset at fair value on their balance sheets. In practice, this created real accounting complexity without a clear corresponding benefit, since the guidance did not map cleanly onto how safeguarding arrangements actually function economically. To address this, the SEC issued SAB No. 122, formally rescinding the interpretive guidance in SAB 121. FASB responded by issuing ASU 2025-02, which informs preparers of this rescission and directs entities to instead apply standard loss contingency guidance under ASC 450-20 when accounting for crypto-asset safeguarding obligations, rather than the bespoke fair value recognition approach SAB 121 had required. Effective date: Entities should apply the rescission of Topic 5.FF on a fully retrospective basis in annual periods beginning after December 15, 2024, meaning this change is already in effect for most calendar-year filers as they prepare 2026 financial statements. What This Means for Finance Teams Preparing 2026 Filings For companies with any crypto-asset safeguarding arrangements, the shift away from SAB 121's fair value recognition approach and toward standard ASC 450-20 loss contingency treatment should already be reflected in current financial statements, given the retrospective effective date. This is worth confirming directly with your auditors if it hasn't been addressed yet. For companies working toward expense disaggregation compliance, the extended effective dates under ASU 2025-01 buy time, but the underlying data work does not shrink to fit a longer deadline. Building the general ledger structure and cost allocation methodology needed to disaggregate and reconcile expense categories credibly is a multi-quarter project for most organizations, not a year-end adjustment. Frequently Asked Questions When does the expense disaggregation disclosure requirement take effect? Under ASU 2025-01, annual reporting periods beginning after December 15, 2026, must comply with interim reporting periods within annual reporting periods beginning after December 15, 2027, also in scope. What was SAB 121, and why was it rescinded? SAB 121 was the 2022 SEC guidance requiring entities safeguarding crypto assets for platform users to record a liability and corresponding asset at fair value. The SEC rescinded it through SAB 122 because it created accounting complexity without a clear practical benefit. What accounting guidance now applies to crypto-asset safeguarding obligations? Following the SAB 121 rescission, entities apply standard loss contingency guidance under ASC 450-20 when accounting for obligations to safeguard crypto assets, rather than the fair value recognition SAB 121 had required. Is the SAB 121 rescission retroactive? Yes. Entities apply the rescission on a fully retrospective basis in annual periods beginning after December 15, 2024, which means it is already in effect for most calendar-year filers. What is ASU 2024-03, and how does it relate to ASU 2025-01? ASU 2024-03, issued in November 2024, is the original standard requiring public business entities to disaggregate income statement expenses into specific categories. ASU 2025-01 does not change the substance of that requirement; it only clarifies when it takes effect. Who should be tracking these updates? CFOs, controllers, financial reporting teams, and auditors of public business entities, particularly those with crypto-asset custody arrangements or complex expense structures subject to disaggregation requirements. Talk to Our Team Preparing for expense disaggregation compliance or reassessing crypto-asset accounting treatment under the current guidance? Pierag's  Accounting Advisory practice helps finance teams translate standard-setter updates like these into practical implementation plans well ahead of effective dates. Talk to our team about your reporting readiness. Related reading: Standard Setters' Updates, H2 2025 Edition | Understanding DISE: Disaggregation of Income Statement Expenses | Audit Trail: Ensuring Financial Integrity and Accountability

Point of View | 6-8 Min Read Transparent financial reporting depends on more than accurate top-line numbers. Investors, lenders, and other capital providers rely on financial statements to evaluate a company's performance, assess its prospects for future cash flows, and benchmark it against peers, and a critical part of that evaluation is understanding what actually makes up a company's expenses. Expense composition reveals cost structure, operational efficiency, and long-term sustainability in ways that a single aggregated number cannot. Historically, U.S. GAAP did not require consistent disaggregation of income statement expenses, which left companies free to report at very different levels of detail. That inconsistency made it genuinely difficult for investors and analysts to compare financial results across entities and industries, since one company's "operating expenses" line might hide detail another company discloses openly. This is the gap DISE, the Disaggregation of Income Statement Expenses requirement, was built to close. How DISE Came to Be FASB first addressed this gap in July 2023, introducing a proposed Accounting Standards Update titled Income Statement, Reporting Comprehensive Income, Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. After gathering extensive feedback through public comment periods and roundtable discussions with preparers, investors, and auditors, FASB finalized the amendments as ASU 2024-03 in November 2024. The goal is straightforward: enhance the decision-usefulness of financial reporting by requiring companies to disclose disaggregated expense detail within the footnotes of their financial statements, giving users of financial statements a clearer view of cost composition than aggregated income statement line items alone can provide. ASU 2025-01: Clarifying When DISE Actually Applies In January 2025, FASB issued ASU 2025-01, Income Statement, Reporting Comprehensive Income, Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update did not change the substance of the disaggregation requirement itself. It resolved confusion about exactly when the requirement takes effect, particularly around how it applies to interim reporting periods. The clarified effective dates are: Annual reporting periods: beginning after December 15, 2026 Interim reporting periods: within annual reporting periods beginning after December 15, 2027 Early adoption is permitted for companies that want to get ahead of the requirement rather than wait for the mandatory effective date. The updates apply to all public business entities, without exception, based on size or industry. What DISE Requires in Practice At its core, DISE requires public business entities to disaggregate expenses reported in the income statement into specific, defined categories and to reconcile those disaggregated figures back to the totals already reported in the financial statements. Rather than a single "cost of revenue" or "operating expenses" line, users of the financial statements will be able to see the underlying components that build up to those totals, disclosed within the footnotes. This is a meaningfully different level of transparency than most companies currently provide, which is why the practical implementation work matters more than the disclosure itself. What This Means for Finance and Reporting Teams Even with effective dates that sit a full reporting cycle or more away, the practical work behind DISE compliance is not something to defer until the deadline approaches. Building the general ledger structure, cost allocation methodology, and reconciliation process needed to disaggregate expenses credibly, and to reconcile those disaggregated figures back to totals already reported in the financial statements, is a multi-quarter undertaking for most organizations, not a footnote drafted at year-end close. Companies should treat the extended effective date as planning time, not slack in the schedule. Early adopters in particular may find that getting ahead of the requirement gives them a cleaner comparative baseline once the mandatory effective date arrives, rather than a first year of disclosure that reads as rushed against prior periods that used a different level of detail. Frequently Asked Questions What is DISE in accounting? DISE stands for Disaggregation of Income Statement Expenses, a FASB requirement under ASU 2024-03 that requires public business entities to break down income statement expenses into specific categories and reconcile them to the totals already reported in the financial statements. When does DISE take effect? Under ASU 2025-01's clarified effective dates, annual reporting periods beginning after December 15, 2026, must comply, with interim reporting periods within annual reporting periods beginning after December 15, 2027, also required to comply. Early adoption is permitted. What did ASU 2025-01 change compared to ASU 2024-03? ASU 2025-01 did not change the substance of the DISE requirement. It clarified the effective date, resolving confusion about how the requirement applied to interim reporting periods specifically. Why did FASB introduce the DISE requirement? Because U.S. GAAP historically did not require consistent disaggregation of income statement expenses, creating diversity in reporting practices that made it difficult for investors to compare cost structures and operational efficiency across companies and industries. Does DISE apply to all companies? It applies to all public business entities, regardless of size or industry, with no exceptions carved out in the standard. Who should be preparing for DISE now? CFOs, controllers, and financial reporting teams at public business entities, particularly those whose general ledger systems are not currently structured to produce reconciled expense detail at the category level, the standard requires. Talk to Our Team Preparing your general ledger and reporting processes for DISE compliance ahead of the 2026 and 2027 effective dates? Pierag's Accounting Advisory practice helps finance teams build the data structure and reconciliation processes this standard requires, well ahead of the deadline. Talk to our team about your reporting readiness. Related reading: Standard Setters' Updates, H2 2025 Edition | Audit Trail: Ensuring Financial Integrity and Accountability

Meeting India's statutory filing and compliance obligations on time requires tracking dozens of deadlines across multiple regulatory frameworks simultaneously. A missed Income Tax filing, a delayed GST return, or a late MCA form can trigger penalties, interest, and regulatory action that create avoidable costs and reputational risk. Pierag's FY2025-26 Compliance Calendar consolidates the key statutory deadlines across Income Tax, GST, FEMA, MCA, SEZ, and STPI into a single, easy-to-use reference for finance teams, CFOs, company secretaries, and compliance managers operating in India. Download the FY2025-26 Compliance Calendar (PDF) What the Compliance Calendar Covers The FY2025-26 Compliance Calendar covers six regulatory frameworks that collectively define the statutory compliance obligations of most Indian companies, including private limited companies, public companies, listed entities, and Indian subsidiaries of foreign corporations. Income Tax. Key deadlines include advance tax instalment due dates, TDS deposit and return filing dates, tax audit report submission under Section 44AB, and the annual income tax return filing deadline. Non-compliance triggers interest under Sections 234A, 234B, and 234C, as well as late filing fees under Section 234F. [1] GST. Monthly and quarterly GSTR deadlines for regular taxpayers, composition scheme filers, and Input Service Distributors, along with annual return filing under GSTR-9 and reconciliation statement filing under GSTR-9C for eligible taxpayers. GST compliance is among the highest-frequency obligations in the calendar, with due dates falling in every month of the financial year. [2] FEMA. Key annual reporting requirements under the Foreign Exchange Management Act, including the Annual Return on Foreign Liabilities and Assets (FLA) filed with the Reserve Bank of India. This deadline applies to Indian entities that have received Foreign Direct Investment or made Overseas Direct Investment. [3] MCA. Statutory filings under the Companies Act 2013 administered by the Ministry of Corporate Affairs, including Annual Return (MGT-7), Financial Statements (AOC-4), Director KYC (DIR-3 KYC), and other event-based compliance forms. Delays in MCA filings attract additional fees and, for persistent non-compliance, legal action against the company and its directors. [4] SEZ. Reporting and compliance obligations for units operating within Special Economic Zones, including quarterly performance statements and annual reports submitted to the relevant Development Commissioner. STPI. Compliance obligations for units registered under the Software Technology Parks of India scheme, including import-export reporting, annual performance reports, and bond-related filings. Why a Consolidated Compliance Calendar Matters India's regulatory compliance landscape is fragmented across multiple ministries, departments, and portals. The Income Tax Department, GST Network, Reserve Bank of India, Ministry of Corporate Affairs, Development Commissioners, and STPI all operate on different filing cycles, use different portals, and carry different penalty structures for non-compliance. Finance teams managing compliance across these frameworks in isolation risk missing deadlines that fall in the same period but under different regulatory bodies. A consolidated compliance calendar solves this by presenting all key due dates in a single view, allowing finance and compliance teams to plan, allocate internal resources across filing periods, and reduce the reactive scramble that accumulates when deadlines approach without adequate preparation. For companies operating in India with international reporting obligations or inbound investment structures, the FEMA and MCA deadlines are particularly critical. Delays in FLA return filing or MCA annual filings can affect regulatory standing and create complications in subsequent corporate transactions, audits, or investor due diligence processes. Pierag's Tax Advisory practice and Accounting Advisory teams support organisations in managing Indian statutory compliance obligations across all six frameworks covered in the calendar. The FY2026-27 Compliance Calendar is also available for planning the current financial year. Frequently Asked Questions What regulatory frameworks does the FY2025-26 Compliance Calendar cover? The calendar covers Income Tax, GST, FEMA, MCA, SEZ, and STPI filing and compliance deadlines for Indian companies and India-based entities across the full financial year from April 2025 to March 2026. [1][2][3][4] Who should use this compliance calendar? Finance managers, CFOs, company secretaries, tax teams, and compliance officers at private limited companies, public companies, listed entities, and Indian subsidiaries of foreign corporations operating under Indian company law and tax regulations. What is the penalty for missing GST or Income Tax deadlines? GST late filing attracts interest at 18% per annum and late fees under Sections 47 and 50 of the CGST Act. Income Tax late filing attracts interest under Sections 234A, 234B, and 234C, and a late filing fee under Section 234F of up to INR 5,000. [1][2] Is there a compliance calendar available for FY2026-27? Yes. The FY2026-27 Compliance Calendar is available separately and covers the current financial year from April 2026 to March 2027. References [1] Income Tax Department, Government of India. (2025). Key provisions: Advance tax, TDS, audit report and return filing deadlines under the Income Tax Act 1961. Retrieved from https://www.incometax.gov.in/iec/foportal/ [2] GST Council, Government of India. (2025). GSTR filing calendar: Monthly, quarterly and annual return due dates under the CGST Act 2017. Retrieved from https://www.gst.gov.in/ [3] Reserve Bank of India. (2025). Annual Return on Foreign Liabilities and Assets (FLA): Filing requirements under FEMA 1999. Retrieved from https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx [4] Ministry of Corporate Affairs, Government of India. (2025). MCA annual compliance filings: MGT-7, AOC-4, DIR-3 KYC and event-based forms under the Companies Act 2013. Retrieved from https://www.mca.gov.in/