New Accounting Guidelines From Apr 1 To Improve Forex Guidance

Will help encourage global capital inflows to Indian firms

- MANU KAUSHIK

The National Financial Reporting Authority (NFRA) has proposed key changes to the accounting standards, with an aim to more accurately capture the impact of transactions conducted by firms in foreign currency on their financial statements.

The proposed amendments to Ind AS 21 will give clearer guidance to companies to determine "appropriate exchange rate," a move which could come in handy for them in dealing with countries witnessing undue short-term currency volatility or are not adequately transparent about the exchange values of their currencies.

The revised audit norms will take effect from April 1, 2025.

Industry sources said the improvement in financial reporting from the proposed amendments would help enhance investors' trust in Indian firms with substantial foreign operations, including the export-intensive ones.

A major benefit being seen is in terms of capital inflows from global patient capital such as sovereign funds, pension funds.