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The H1 2026 Standard Setters’ Updates provides a consolidated view of the key accounting, financial reporting and regulatory developments from the first half of 2026. It brings together the latest FASB guidance, standards effective in 2026, significant SEC developments and ongoing standard-setting initiatives, helping finance and accounting professionals stay informed about changes shaping the reporting landscape. The update covers important developments such as guidance on paid-in-kind dividends on equity-classified preferred stock and environmental credits and environmental credit obligations, along with accounting standards relating to credit losses, convertible debt, stock compensation, income tax disclosures and joint venture formations that are relevant for 2026 reporting periods. It also highlights key SEC regulatory developments spanning capital raising, public company reporting, private fund reporting, foreign private issuer disclosures, investment companies, climate-related disclosures and market structure. These developments reflect the broader evolution of regulatory expectations and reporting requirements for businesses and financial market participants. Looking ahead, the update provides visibility into FASB projects currently under development, including accounting for crypto asset transfers, private credit disclosures, commodities, transferable tax credits, debt exchanges, digital assets and hedge accounting. It captures the current status of these initiatives and the potential next steps, offering a view of areas that may influence future accounting and disclosure practices. Overall, this update is designed to help finance and accounting teams understand what has changed, identify what is now effective and stay ahead of developments that could shape future reporting requirements. Read the full H1 2026 Standard Setters’ Updates to explore the latest accounting, regulatory and standard-setting developments and understand what they could mean for your reporting landscape.

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

Compliance management today requires visibility and proactive planning. With numerous regulatory deadlines across Income Tax, GST, FEMA, MCA, SEZ, and STPI, staying organized is essential for businesses to operate smoothly. We have put together the Compliance Calendar for FY 2026–27, designed to help organizations track key due dates and integrate reminders directly into Outlook calendars for better compliance management. Sharing this resource with the hope that it helps teams stay ahead of deadlines and focused on what matters most, building resilient and responsible businesses.

In December 2025, the Financial Accounting Standards Board (FASB) issued ASU 2025-10, Government Grants (Topic 832), introducing dedicated U.S. GAAP guidance for the accounting of government grants received by business entities. Previously, U.S. GAAP lacked a specific standard for such grants, leading companies to rely on analogies to other guidance such as IAS 20, ASC 450, or Subtopic 958-605. This resulted in inconsistent accounting practices and reduced comparability across financial statements. The new update establishes a structured framework for recognizing, measuring, presenting, and disclosing government grants, improving transparency and consistency in financial reporting. Key Highlights 1. Dedicated Guidance: Topic 832 introduces explicit accounting guidance for government grants received by business entities under U.S. GAAP. 2. Clear Grant Classification: Grants are categorized into: ⇨ Asset-related grants: linked to the purchase or construction of long-lived assets. ⇨ Income-related grants: intended to compensate for expenses or losses. 3. Recognition Criteria: Grants are recognized only when it is probable that the entity will meet grant conditions and receive the grant. 4. Measurement: Grants must generally be measured at fair value at recognition, including non-monetary assets. 5. Accounting Approaches for Asset Grants: ⇨ Deferred Income Approach: Grant recorded as deferred income and recognized over the asset’s useful life. ⇨ Cost Accumulation Approach: Grant reduces the carrying amount of the asset, lowering depreciation over time. 6. Enhanced Disclosures: Entities must provide expanded disclosures on the nature of grants, accounting policies applied, grant terms, contingencies, financial statement impacts, and potential repayment risks. Scope The standard applies to business entities and excludes not-for-profit organizations and employee benefit plans, which already follow separate accounting guidance. Certain transactions such as income tax benefits, government guarantees, and below-market interest loans are also excluded. Impact ASU 2025-10 aligns U.S. GAAP more closely with international practices while maintaining its principles-based structure. The update is expected to improve comparability, reduce diversity in practice, and enhance the transparency of government grant reporting.

Standard Setters’ Updates – H2 2025 This edition provides a concise and practical overview of the most significant accounting, regulatory, and sustainability reporting developments from the second half of 2025, helping organizations prepare for upcoming changes in 2026 and beyond. Key Highlights: Major Accounting Standards Updates (ASUs) issued in H2 2025, covering credit losses, internal-use software, derivatives and hedging, purchased loans, government grants, interim reporting, and codification improvements. Simplification and consistency initiatives by FASB, aimed at reducing complexity, improving comparability, and better aligning accounting outcomes with economic substance. Snapshot of FASB current projects, including debt exchanges, environmental credit programs, crypto asset transfers, equity method improvements, and cash flow statement refinements. Regulatory developments from the SEC, including leadership changes, crypto asset guidance, AI and fraud task forces, financial reporting manual updates, and implications of major U.S. fiscal legislation. Sustainability reporting developments, highlighting ISSB exposure drafts and significant simplification of European Sustainability Reporting Standards (ESRS), with reduced reporting burden and enhanced interoperability. Practical effective-date guidance, with appendices outlining ASUs effective in 2025 and 2026 to support timely implementation planning.

The FASB has recently released ASU 2025-06, and it marks one of the most significant shifts in how companies account for internal-use software. With agile and iterative development now the norm, the older, sequential model of capitalization no longer reflected technological reality. ASU 2025-06 modernizes the standard by: 🔹 Removing stage-based capitalization rules 🔹 Introducing clarity on probable-to-complete threshold 🔹 Requiring evaluation of Significant Development Uncertainty (SDU) 🔹 Aligning disclosures with PP&E guidance for greater consistency At Pierag Consulting , we continue to help finance and technology leaders navigate the evolving regulatory landscape, integrating accounting clarity with digital transformation realities. Download the full technical note for a deeper dive into scope, recognition criteria, disclosure requirements, and transition pathways.

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

This compliance calendar serves as a vital tool for businesses and individuals in India to ensure they meet necessary legal and statutory filling requirements for Income tax, GST, FEMA, MCA, SEZ & STPI throughout the year.