INTERNATIONAL FINANCIAL REPORTING STANDARDS AS

GLOBAL STANDARDS

The term International Financial Reporting Standards (IFRS) comprises

IFRS issued by IASB; IAS issued by International Accounting Standards
Committee (IASC); Interpretations issued by the Standard Interpretations
Committee (SIC) and the IFRS Interpretations Committee of the IASB.
International Financial Reporting Standards (IFRSs) are considered a
“principles based” set of standards. In fact, they establish broad rules rather
than dictating specific treatments. Every major nation is moving toward
adopting them to some extent.

WHAT ARE INDIAN ACCOUNTING STANDARDS (IND AS)?

In India, the Institute of Chartered Accountants of India (ICAI) has worked

towards convergence by considering the application of IFRS in Indian
corporate environment of Indian Accounting Standards with Global
Standards. Recognising the growing need of full convergence of Indian
Accounting Standards with IFRS, ICAI constituted a Task Force to
examine various issues involved. Full convergence involves adoption of
IFRS in the same form as that issued by the IASB. While formulating the
Accounting Standards, ICAI recognises the legal and other conditions
prevailing in India and makes deviations from the corresponding IFRS. For
convergence of Indian Accounting Standards with International Financial
Reporting Standards (IFRS), the Accounting Standard Board in
consultation with the Ministry of Corporate Affairs (MCA)), has decided
that there will be two separate sets of Accounting Standards viz. (i) Indian
Accounting Standards converged with the IFRS – standards which are
being converged by eliminating the differences of the Indian Accounting
Standards vis-à-vis IFRS (known as Ind AS) and (ii) Existing Notified
Accounting Standards.

Indian Accounting Standards (Ind AS) are IFRS converged standards

issued by the Central Government of India under the supervision and
control of Accounting Standards Board (ASB) of ICAI and in
 consultation with National Advisory Committee on Accounting
Standards (NACAS).

Ind AS are named and numbered in the same way as the

corresponding International Financial Reporting Standards (IFRS).

The most important differences between IFRS and Indian GAAP are

mentioned:

 IFRS is a much broader accounting standard in terms of scope and

application. IFRS has been used by 110 countries already. Indian GAAP is
quite narrow and is only applicable for the Indian
 For IFRS, the companies may need to prepare consolidated financial
statements if they don’t fall under the exemption of IAS-27 (Para 10). As
per Indian GAAP, a company doesn’t need to prepare consolidated
statements.
 As per IFRS, the companies need to disclose as a note that they’re
complying with the IFRS. But in the case of Indian GAAP, there’s no need
to a statement disclosing that the company is complying with Indian
GAAP.
 Revenue is always considered as the fair value of consideration
receivable or received in the case of IFRS. As per Indian GAAP on the
other hand, revenue is considered when the companies charge for
products/services and also the benefits companies receive by using their
resources.
 As per IFRS, if the company isn’t using the functional currency, then
the assets and liabilities of the company would be converted by the
exchange rate. On the other hand, Indian GAAP doesn’t require an
exchange rate since it’s only applicable for Indian companies.

 There are many differences between IFRS and Indian GAAP. Let’s
have a look at the chief differences between these two –
 Basis for
comparison
between IFRS IFRS Indian GAAP
vs Indian
GAAP

Meaning of the The Indian version of

abbreviation International Financial
Generally Accepted
Reporting Standards
Accounting Principles
International Accounting Ministry of Corporate
Developed by
Standards Board (IASB) Affairs (MCA)
When a company is said
A company that is to follow the Indian
complying with IFRS needs GAAP, it’s presumed
Disclosure to disclose as a note that that it’s complying with
their financial statements it and showing a true &
comply with the IFRS. fair view of its financial
affairs.
Companies in 110+
countries have adopted Indian GAAP is only
Adopted by IFRS. More and more adopted by Indian
countries are making the companies.
shift as well.
Indian GAAP doesn’t
How to adopt IFRS 1 provides clear
give any clear
it for the first instruction on how to adopt
instruction on the first
time? IFRS for the first time.
time adoption.
Usage of When the financial There’s no question of
currency in statements are not using exchange rate
the presented in the functional since Indian GAAP is
presentation currency, then the assets only used in the Indian
 and liabilities of the balance
sheet are transmuted by the context.
exchange rate.
As per the Indian
If the companies don’t
GAAP, the companies
come under the exemption
should prepare
Consolidated criteria mentioned under
individual financial
Financial IAS 27 (Para 10), the
statements. There’s no
Statements companies need to
requirement of
prepare consolidated
preparing consolidated
financial statements.
statements.
The companies Indian companies
following IFRS needs to following Indian GAAP
What financial needs to prepare the
prepare the balance sheet
statements balance sheet, profit &
(statement of financial
need to be loss account, and cash
position) and the income
prepared? flow statement.
statement (statement of
comprehensive income).
The money charged for
the products/services to
As per IFRS, the revenue is the customers and the
How is rewards received by
shown at the fair value of
revenue using the resources
the money received or
shown? come under revenue as
receivable.
per Indian GAAP.