Disclosure as Strategy: A CFO’s Roadmap to Navigating the Companies (Indian Accounting Standards) Second Amendment Rules, 2025.

In the emerging business landscape, disclosure has become a strategic asset—not simply a compliance ritual. Investors reward transparency. Regulators expect discipline. Boards demand clarity. The Companies (Indian Accounting Standards) Second Amendment Rules, 2025, reinforce this shift by elevating the expectations from corporate reporting and placing a greater responsibility on the office of the CFO.

These amendments refine several key Indian Accounting Standards (Ind AS), deepening the quality of disclosures, strengthening governance, and aligning Indian reporting frameworks closer to global practice. For finance leaders, these changes influence not only financial statements but the broader organisational narrative on risk, performance, resilience and strategic choices.

A New Disclosure Landscape: What Has Changed

The 2025 amendments touch eight major standards: Ind AS 1, 7, 10, 12, 28, 32, 101 and 107. Each amendment carries practical implications that CFOs must internalize.

1. Ind AS 1 – Presentation of Financial Statements

The most consequential shift concerns the classification of liabilities as current or non-current, particularly when debt agreements contain covenants. The amendments clarify that if a company does not possess an unconditional right, at the reporting date, to defer settlement for at least 12 months, the liability must be classified as current—even if waivers or renegotiations take place afterwards.

This change pushes disclosure into a more realistic and risk-aware zone. Companies must communicate the nature of covenants, their measurement conditions, the timing of compliance assessments, and the proximity of risk. It places liquidity management under sharper public focus and signals to markets that covenant compliance is integral to financial stability.

2. Ind AS 7 – Statement of Cash Flows

New disclosure requirements have been added for supplier finance arrangements, including reverse factoring and extended payables programs. Companies must now describe the terms of these arrangements, the magnitude of balances outstanding, the payment tenor, and how these arrangements influence working capital.

The intent is to uncover cash flow dynamics that historically blurred the line between trade credit and financing. For CFOs, this demands enhanced data capturing, reconciliation accuracy, and monitoring of supply chain financing structures.

3. Ind AS 107 – Financial Instruments: Disclosures

Corresponding to the Ind AS 7 changes, financial instruments disclosures must now include supplier financing arrangements more explicitly. Users of financial statements must be able to understand the extent to which liabilities are financed by third parties, how these arrangements interact with liquidity risks, and whether payment terms materially differ from those of normal trade creditors.

This improves visibility on hidden leverage and potential liquidity strain during stressed periods. Treasury and finance teams must present a cohesive, transparent view of financial liabilities and their behavioural maturity.

4. Ind AS 10 – Events After the Reporting Period

Changes made to align terminology with the revised guidance on covenants reinforce the principle that events occurring after the reporting period—but relevant to covenant conditions—must be assessed carefully. CFOs must therefore ensure robust tracking of post-balance-sheet events that may influence classification, disclosures or risk commentary.

5. Ind AS 12 – Income Taxes

A significant update concerns the introduction of a temporary exemption for deferred tax accounting arising from the implementation of global minimum tax (Pillar Two) rules. Entities are not required to recognize deferred tax assets or liabilities on these taxes; however, meaningful disclosures are now expected regarding exposure to these regimes, affected jurisdictions, and potential future implications.

This is a strategic area. Global minimum tax exposure can influence effective tax rates, international structuring, and forward-looking profitability. Stakeholders will expect clarity on the company’s preparedness and the anticipated long-term impact.

6. Ind AS 101 – First-time Adoption of Ind AS

Relief has been granted to first-time adopters regarding lease classification during transition, particularly for contracts involving land and buildings. Instead of reconstructing historical information, companies may rely on facts and circumstances existing at the transition date.

This reduces complexity but requires thoughtful disclosure of judgments applied, ensuring investors understand the impact of transitional choices on the opening balance sheet.

7. Ind AS 28 – Investments in Associates and Joint Ventures

Technical clarifications have been introduced to ensure consistency in applying the equity method and referencing relevant guidance. Although subtle, these updates affect how companies articulate their interest in associates, the continuity of profit attribution and the explanation of adjustments within equity accounting.

8. Ind AS 32 – Financial Instruments: Presentation

Minor amendments help refine how netting arrangements and related instruments are presented. These adjustments encourage clearer communication about whether financial assets and liabilities may be settled on a net basis, supporting better understanding of counterparty and liquidity risk.

What This Means for CFOs: Turning Compliance Into Competitive Advantage

A Higher Standard of Transparency

Across these amendments, the underlying theme is unmistakable: Indian financial reporting is being recalibrated towards transparency, comparability and risk honesty. CFOs must therefore treat disclosure not as a statutory output but as a strategic signal. The quality of explanation—about covenants, cash flow structures, tax exposures, leasing assessments and liquidity risk—will shape investor trust and influence credit perceptions.

Strengthening Data Foundations

Most new disclosures require granular, accurate and timely data. This means revisiting the company’s financial systems, ERP capabilities, treasury workflows, supplier financing platforms and tax reporting architecture. Reliable disclosure depends on the integrity of backend processes, and many organisations will find gaps that need rectifying.

Integrating Finance With Strategy and Governance

Because the amendments touch areas where judgment plays a central role—covenants, financial instruments, tax exposure, lease classification—CFOs must ensure robust governance frameworks. Audit committees, risk committees, treasury teams and sustainability functions (where relevant) should collaborate to frame balanced, insightful disclosures.

Investor and Market Communication

Enhanced disclosures inevitably reshape how the company is perceived. For example, a reclassification of long-term debt as current due to covenant structures may be interpreted as heightened liquidity risk unless contextualized clearly. Similarly, supplier finance information must be explained to avoid misinterpretation as hidden leverage.

The CFO’s narrative thus becomes crucial. Transparent, well-structured communication can convert potentially adverse accounting impacts into demonstrations of strong governance and foresight.

Preparing the Organisation: A CFO’s Action Blueprint

1. Conduct a thorough disclosure gap assessment comparing current reporting with amended standards.
2. Revise accounting policies, internal controls and reporting manuals to embed the new requirements.
3. Upgrade systems and data capture processes to generate information on covenants, supplier financing, tax exposure and leasing judgments.
4. Train finance and cross-functional teams to understand the rationale behind the amendments and the new disclosure expectations.
5. Enhance oversight mechanisms involving the audit committee, risk committee and board to monitor high-judgment areas.
6. Develop a clear investor communication strategy that contextualizes changes and bridges potential perception gaps.
7. Monitor compliance continuously, ensuring readiness for subsequent audit scrutiny and regulatory expectations.

Conclusion: What You Disclose Defines Your Business

The Companies (Ind AS) Second Amendment Rules, 2025, elevate the role of disclosure from a compliance artifact to a strategic expression of corporate integrity. For CFOs, this is a call to lead with transparency, strengthen data governance, and adopt a forward-looking approach to financial communication.

In an environment where stakeholders increasingly value clarity over complexity, the organisation’s disclosure quality reflects its character. And in that sense, what you disclose does far more than report your business—it defines it.