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What Really Deserves Attention Every year-end close has a pattern. The systems run as designed for most of the year, numbers flow in, controls operate, and then March arrives. Suddenly, manual journal entries start appearing. Not because something went wrong, but because the year has finally ended and reality needs to be aligned with the books. This is exactly why manual journal entries during the year-end close deserve a different level of attention. They are not routine. They are corrective. They often involve judgment. And by 2026, both auditors and regulators will treat them as one of the clearest windows into how disciplined a finance function really is. Why the Year-End Close Window Changes the Risk Profile Manual journal entries posted during the year-end close are different from those posted in July or October. They tend to be larger, more judgment-heavy, and directly affect reported profit, net worth, or key ratios. More importantly, they are often posted when time is short and scrutiny is high. In practical terms, this is the only window where management can still influence outcomes before the numbers are frozen. That is why auditors do not look at these entries as simple corrections. They look at them as decisions. By 2026, the expectation is clear. Auditors are required to show that they have not just checked the math, but understood the intent behind these entries. What Makes a Manual Journal Entry Worth Questioning Not all manual entries deserve equal attention. Experienced auditors focus on patterns, not volume. Entries that usually raise questions are those that: None of these automatically means something is wrong. But each of them demands a clear, documented explanation that stands on its own, even months later. Where Audits Often Break Down in Practice Most audit friction around manual journal entries does not come from disagreement on accounting standards. It comes from weak preparation. Common situations auditors encounter include explanations built after questions are raised, assumptions that quietly changed during the year-end without formal approval, or reliance on last year’s logic even though business conditions have clearly shifted. In these moments, the issue is no longer about a single journal entry. It becomes a question of whether judgment was applied thoughtfully or defensively. By 2026, “this is how we have always done it” is no longer an acceptable answer in this area. Conclusion Manual journal entries during the year-end close are not a red flag by default. They are a mirror. They reflect how well a company understands its numbers, how early it confronts uncomfortable issues, and how confidently it can explain its decisions. In 2026, the quality of these entries often tells auditors more about governance and discipline than the systems themselves. And that is why this topic is not only relevant. It is unavoidable.

For decades, being a “Principal Auditor” of a large group in India felt a bit like being a relay race coordinator. You waited for the branch or subsidiary auditors to finish their lap, took their signed reports , and sprinted to the finish line to sign the Consolidated Financial Statements (CFS) If something went wrong at a subsidiary level? “Not my problem,” was the standard defense. “I relied on the work of the other auditor as per SA 600 As of January 2026, that defense is officially dead NFRA isn’t just changing a rule; they are changing the definition of responsibility. They’ve seen too many ₹1,000-crore frauds hide in “immaterial” subsidiaries while the main auditor claimed they didn’t have the right to check the books of the branch What No more Hiding actually means 1)You can no longer just collect “Clean Reports” like trading cards. If a subsidiary in a remote corner shows a 40% profit margin while the rest of the industry is tanking, you can’t say, “The branch auditor signed it, so it’s fine.” NFRA now expects you to challenge that auditor. If you aren’t satisfied, you go there yourself. 2) The new stance requires the Principal Auditor to evaluate the competence of the component (subsidiary) auditor. The 2026 Way: You must document why you trust them. Do they have the resources? Do they understand the industry? NFRA is holding you liable for their lack of expertise.The Old Way: “They are a CA firm, so they must be good.” The 2026 Way: You must document why you trust them. Do they have the resources? Do they understand the industry? NFRA is holding you liable for their lack of expertise 3)Branch auditors used to guard their working papers like state secrets. NFRA’s 2026 position is clear: The Principal Auditor must have access to the component auditor’s work. If they don’t show you how they verified the revenue, you can’t rely on their report How to Protect your license If you are signing group accounts this year, stop acting like a consolidator and start acting like an investigator. Conclusion A 5-year debarment isn’t worth a ‘polite’ relationship with a branch auditor. It’s time to demand the working papers. How are your subsidiary partners reacting to the new transparency?”

In 2027, financial reporting is getting a major update. The old IAS 1 – Presentation of Financial Statements is being replaced by a brand-new standard called IFRS 18 – Presentation and Disclosure in Financial Statements. This isn’t just a name change  it brings some important improvements to how companies present financial information Why the Change? IAS 1 has been the backbone of financial statement presentation for decades. But investors and analysts often found companies’ income statements hard to compare because formats varied widely. IFRS 18 aims to fix that by adding clear rules and useful disclosures so financial reports become more transparent and consistent. 1. A More Standardised Income Statement Under IAS 1, companies had flexibility in how they presented items like revenue, expenses and profit. This often made it difficult to compare one company with another. IFRS 18 introduces defined categories for the income statement, such as:Operating,Investing, Financing For the first time, companies must show standard subtotals like These subtotals give readers a clearer picture of how a business actually performs 2. Clear Rules for “Management Performance Measures” (MPMs) Many companies currently show non-standard performance figures like adjusted EBITDA or other custom totals outside the core financials. Under IFRS 18, if a company uses these management-defined performance measures, they must: This means those popular performance metrics become more transparent and dependable 3. Better Grouping and Breakdown of Items IFRS 18 also gives more guidance on how to group and break down items in financial statements. The aim is to make sure similar items are presented consistently, avoid confusion, and help readers find relevant information more easily. 4. What Doesn’t Change Importantly, IFRS 18 doesn’t change the rules for measuring or recognising revenue, expenses, assets or liabilities. Instead, it simply changes how results are presented and disclosed so that users  like investors, analysts and lenders  can understand them better. 5. When It Applies IFRS 18 will be mandatory for annual reporting periods beginning on or after 1 January 2027. Entities must also restate comparative figures (e.g., the prior year’s income statement) under the new format. Early application is allowed but must be disclosed In Simple Words: What You’ll Notice • Statements will look more structured and consistent across companies. • Important profit figures (like operating profit) become mandatory and comparable. • Non-standard measures (like custom profitability metrics) will be explained and audited. • Financial statements will become more transparent and easier to analyse. • You won’t see changes in what is reported, only how it’s shown.  Conclusion The shift from IAS 1 to IFRS 18 is one of the biggest changes in financial statement presentation in years. It’s designed to reduce confusion, improve comparability between companies, and give users better insights into performance. While the core accounting rules haven’t changed, companies will need to rethink how they display and explain financial results.

If your business has more than one company under it, maybe a parent company with a few subsidiaries, then you already know the process of putting all those numbers together is called group reporting or consolidation. Until now, many companies have managed this with a mix of spreadsheets, templates, and a bit of mental math. But 2026 is going to change that. And it will change it in a way most businesses are not thinking about yet. Why Is 2026 a Big Deal? Two accounting standards IND AS 110 and IND AS 111 are getting updates that will affect how groups prepare their financial statements.  On paper, it sounds technical. But in everyday business life, it means this: Things that were easy to combine before may now need deeper checking, clearer documentation, and more careful reporting. What Will Actually Become Difficult? 1. Identifying Who Really Controls Whom Earlier, many group structures were clear: Company A owns Company B, so Company B gets consolidated. But now the rules focus more on actual control, not just ownership percentage. Control can come from: This means a company you thought you had to consolidate may not need to be, and a company you didn’t consolidate earlier may suddenly fall under “controlled.” This will confuse many businesses in 2026. 2)More work on Joint arrangements IND AS 111 (which deals with what you share with partners or other companies) will be stricter. Businesses often enter joint ventures casually“we’ll share profits, you handle operations.” But now you’ll need to clearly show: If it’s not documented properly, auditors will ask questions, and you may need to adjust how you show these arrangements. 3)More Discloures, More explanations Even if nothing changes in your business, the way you explain it in the financials will change. You may need to clearly explain: What Should Businesses Do Now? 1. Review Your Group Structure Make a simple chart like who owns what? who controls what? who decides what? Even a basic review can help spot future issues. 2. Clean Up Old Agreements If you have joint ventures, partnerships, or shared arrangements, rewrite or clarify agreements so they clearly show rights, responsibilities, and decision-making 3. Prepare Early Don’t wait for 2026 to arrive. Start checking how consolidation will change now ,especially if your group has many entities. 4. Improve Documentation Whatever decisions you take about control, ownership, rights keep them documented. In 2026, proper documentation will save a lot of headaches If your group has multiple entities or joint arrangements, a pre-2026 review can prevent last-minute surprises. Early assessment today can save audit stress tomorrow

Ind AS 7 amendment is forcing companies to rethink how they manage cash flow. For years, many Indian companies especially mid-sized manufacturers, traders and consumer businesses relied on supplier finance programmes to manage working capital.It looked simple and harmless:The supplier gets paid early by a bank or fintech,the company pays later.On paper, it felt like a smarter version of extended credit terms. But in 2025, the Ministry of Corporate Affairs aligned Ind AS 7 with global IFRS updates.And suddenly, what looked like “trade payables” might now be seen as something else:A form of short-term borrowing. Globally, regulators realised something risky:Companies were using supplier finance to hide leverage, Balance sheets looked lighter than they actually were and Cash flows looked smoother than reality. To fix this, the new Ind AS 7 amendment asks companies to clearly disclose: What you previously called “trade payable” may now look like bank borrowing to investors, lenders and auditors. Why This Matters to Indian Companies (Especially 2025–26) 1)It changes how healthy your working capital looks Earlier, you could show “smooth” working capital cycles because payments were delayed through supplier finance. Now, Disclosures will show how much of your “smoothness” was created by a lender not operations. 2)Banks may reassess your creditworthiness With more transparency, lenders can see the hidden leverage,Dependency on financing arrangements and Cash flow mismatches.This may affect interest rates or limits. 3) Investors and Boards now get a clearer risk picture Many unlisted mid-sized companies have promoter-driven finance decisions.Earlier, supplier finance helped companies “look” liquid.Now, supplier finance helps companies look transparent.This amendment does not punish businesses.It simply ensures nobody can hide liquidity risks under the word “payables”.This amendment forces board-level conversations about liquidity and real cash flow pressure. Conclusion Ind AS 7 didn’t create a new rule.It simply put a spotlight on something companies were already doing quietly,supplier finance is not the villain but hidden supplier finance is. For companies preparing for IPOs, PE rounds or bank financing, this transparency will matter more than ever.

For years, inventory accounting under IND AS 2 felt straightforward.You bought goods, you valued them at cost or NRV (Net Realisable Value), and you moved on. Commodity prices are swinging so sharply that many companies are discovering a hard truth:The biggest risk to your P&L today may be sitting quietly inside your inventory line.And this is not just a problem for metal companies or real estate developers,even mid-sized manufacturers, traders, and D2C brands are feeling the heat. Why Is Inventory Suddenly a High-Risk Item? Steel prices have seen double-digit swings multiple times in FY24–FY25.Crude-linked materials (plastics, chemicals, packaging) are moving weekly.Construction materials like cement and aluminium are reacting to infra projects and global demand. These fluctuations directly impact NRV testing, which IND AS 2 requires at every reporting date. For many companies, NRV testing used to feel like a formality.In 2025, it has become a full audit exercise.  IND AS 2 Assumes “Stable Markets.” Today’s Markets Are Not Stable. IND AS 2 was built on a practical assumptionthat selling prices don’t collapse drastically within a few weeks. In today’s environment:You may buy raw materials at ₹100,Price falls to ₹85 within 45 days,but your final product selling price hasn’t increasedYour inventory is suddenly worth less than your cost and IND AS 2 requires you to book an immediate loss. Real Estate & Infrastructure Are Feeling the Pressure Under IND AS, work-in-progress (WIP) in real estate is highly sensitive to:Cement price volatilitySteel price volatility,Design changes,Contract renegotiationsA dip in possible selling price or a rise in completion costs can trigger NRV reduction. In 2025, many real estate companies reported higher NRV risk due to:Slower demand in tier-2/3 cities,Higher input costs,Delays in approvals,Competitive pricing pressure and more frequent impairment triggers. Banks & Lenders Are Now Looking at Inventory More Closely Because commodity-linked industries are under pressure, lenders are asking:How recent is your NRV calculation?Have you impaired overstated stock?,Is your inventory genuinely saleable?How reliable are your market price inputs?This means your inventory valuation directly affects:Working capital limits, Renewal negotiations,Credit rating,Loan covenants Many Mid-Sized Businesses Are Missing This Key Point If prices fall after the reporting date but before financial statements are approved, auditors may require adjusting events.This is catching many companies off-guard. Example:A chemical trader valued inventory at ₹120/kg on 31 March.Market dropped to ₹105/kg by 15 April.Financial statements were approved in May.Under IND AS 10, this event is adjusting, meaning the loss must be recognised in 31 March financials. Conclusion Inventory is no longer a passive number on the balance sheet.In 2025, it has become a live risk, influenced by external volatility that companies cannot fully control and when markets move, IND AS 2 moves with them. Because in a world where commodity prices change weekly,the question is “What is the cost of inventory?”…but can we actually recover that cost?”