3 weeks ago
NFRA approves Ind AS 21 changes for cross-border financial reporting
Companies that do business in different countries use different kinds of money.
Sometimes a country's money loses value very quickly because of very high inflation.
That makes it hard for a company in India to report money from its overseas business.
Rules for changing foreign money numbers into Indian money numbers were not always clear.
The National Financial Reporting Authority, a group that watches over financial reports in India, approved new rules to fix this.
The new rules match rules made by a worldwide group called the International Accounting Standards Board.
The changes will help Indian companies with businesses in countries where money loses value fast.
The new rules will start for financial years beginning in April 2027.
This helps companies report their money the same way everywhere in the world.
The National Financial Reporting Authority (NFRA) approved amendments to Ind AS 21, proposed by ICAI, aligning with latest International Accounting Standards Board (IASB) changes.
The changes address accounting issues when financial statements are translated from a stable (non-hyperinflationary) currency into a hyperinflationary currency.
The amendments target multinational companies, particularly Indian firms with overseas subsidiaries.
The revised standard becomes effective for financial reporting periods beginning April 2027, with NFRA recommending the changes to the central government for notification.
NFRA also endorsed editorial amendments to Ind AS 101, Ind AS 1 and Ind AS 28 and discussed strengthening the public consultation process for future accounting standards.
- Who
- The National Financial Reporting Authority (NFRA), with amendments proposed by the Institute of Chartered Accountants of India (ICAI) and aligned with the International Accounting Standards Board (IASB).
- What
- Approved amendments to Indian Accounting Standard (Ind AS) 21 for translating financial statements from stable into hyperinflationary currencies, plus editorial amendments to Ind AS 101, Ind AS 1 and Ind AS 28.
- Where
- India, where NFRA recommended the changes to the central government for notification; the IASB is based in London.
- When
- Approved at NFRA's 24th meeting held last month; effective for financial reporting periods beginning April 2027. The IASB issued its matching changes in November 2025.
- Why
- To address a gap in accounting rules when financial statements are translated from a stable currency into a hyperinflationary currency and keep Indian standards aligned with international financial reporting standards.
Stakeholders
ICAI
Public consultation guidance
Stakeholders
Many stakeholders asked for additional guidance while responding to the proposed amendments.
ICAI
ICAI said there is enough educational material available on its website.
Key facts
- Regulator
- National Financial Reporting Authority (NFRA)
- Standard amended
- Ind AS 21 (Indian Accounting Standard)
- Proposed by
- Institute of Chartered Accountants of India (ICAI)
- Aligned with
- IASB changes issued in November 2025
- Effective from
- Financial reporting periods beginning April 2027
- NFRA meeting
- 24th meeting, held last month
- Other standards edited
- Ind AS 101, Ind AS 1, Ind AS 28
- Affected companies
- Multinational companies, particularly Indian firms with overseas subsidiaries
Sources
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