Introduction to AS and IndAS

 Concept
 Benefits

Roadmap  Process of formulation of AS and IndAS

 Convergence
 Application of AS and IndAS on various entities in India
Meaning of  Accounting Standards are written policy documents issued by

Accounting expert accounting body or by the government or other

regulatory body covering the aspects of recognition,
Standards measurement, treatment, presentation, and disclosure of
accounting transactions in financial statements.
  The enterprises are classified and labelled as Level I, Level II
Classification and Level III companies. Based on this classification and the
category in which they fall the Accounting standards are
of Enterprises applicable to the enterprises.
  Enterprises which fall under any one or more category below mentioned are
termed as Level I Companies 
 Enterprises whose equity or debt securities are listed whether in India or outside
India
 Enterprises which are in the process of listing their equity or debt securities.
Board of directors’ resolution must be available as an evidence
 Banks including co-operative banks

Level I  Financial institutions

 Enterprises carrying on insurance business
Enterprises  All commercial, industrial and business reporting enterprises, whose turnover not
including ‘other income’ for the immediately preceding accounting period on the
basis of audited financial statements exceeds Rs. 50 crore
 All commercial, industrial and business reporting enterprises having borrowings,
including public deposits, in excess of Rs. 10 crores at any time during the
accounting period
 Holding and subsidiary enterprises of any one of the above at any time during the
accounting period
  Enterprises which fall under any one or more category below
mentioned are termed as Level II Companies 
 All commercial, industrial and business reporting enterprises,
whose turnover (excluding ‘other income’) for the immediately
preceding accounting period on the basis of audited financial
statements is greater than Rs. 40 lakhs but less than Rs. 50
Level II crore

Enterprises  All commercial, industrial and business reporting enterprises

having borrowings, including public deposits, is greater Rs. 1
crore but less than  Rs. 10 crores at any time during the
accounting period
 Holding and subsidiary enterprises of any one of the above at
any time during the accounting period
 Level III  Enterprises which do not fall under Level I and Level II, are
considered as Level III enterprises
Enterprises
 Accounting Standard Level I Level II Level III

AS 1 Disclosure of Accounti Yes Yes Yes

ng Principles

AS 2 Valuation of Inventorie Yes Yes Yes

s

AS 3 Cash Flow Statements Yes No No

Applicability
AS 4 Contingencies and Eve Yes Yes Yes
nts Occurring After the Balan
ce Sheet Date

of Accounting
standards AS 5 Net Profit or Loss for t Yes
he Period, Prior Period Items
and Changes in Accounting
Policies
Yes Yes

AS 6 Depreciation Yes Yes Yes

Accounting
 AS 7 Construction Contracts ( Yes Yes Yes
Revised 2002)

AS 9 Revenue Recognition Yes Yes Yes

AS 10 Accounting for Fixed Yes Yes Yes

Assets

AS 11 The Effects Of Change Yes Yes Yes

Applicability
s In Foreign Exchange Rates (
Revised 2003)

of Accounting
standards
AS 12 Accounting for Govern Yes Yes Yes
ment Grants 

AS 13 Accounting for Invest Yes Yes Yes

ments 

AS 14 Accounting for Amalga Yes Yes Yes

mations 
 AS 15 Employee Benef Yes Yes Yes
its (Revised 2005)

AS 16 Borrowing Costs Yes Yes Yes

 

AS 17 Segment Reporti Yes No No

ng 

Applicability of AS 18 Related Party Di Yes No No

Accounting sclosures

standards AS 19 Leases Yes Partial Partial

AS 20 Earnings Per Sh Yes Partial Partial

are

AS 21 Consolidated Fi Yes No No
nancial Statements
 AS 22 Accounting for taxes on inco Yes Yes Yes
me

AS 23 Accounting for Investments i Yes No No

n Associates in Consolidated Finan
cial Statements

AS 24 Discontinuing Operations Yes No No

Applicability of AS 25 Interim Financial Reporting Yes No No

Accounting AS 26 Intangible Assets Yes Yes Yes

standards
AS 27 Financial Reporting of Intere Yes No No
sts in Joint Ventures

AS 28 Impairment of Assets Yes Yes Yes

AS 29 Provisions, Contingent Liabi Yes Partial Partial

lities and Contingent Assets
  AS 19 Leases
Paragraphs 22(c), (e) and (f); 25(a), (b) and (e); 37(a), (f) and (g); and
46(b), (d) and (e), of AS 19 does not apply to Level II and Level III
enterprises
 AS 20 Earnings Per Share
The provisions of Part IV of Schedule VI to the Companies Act, 1956
require all companies to disclose earning per share in their financial

Notes statements. AS 2o does not mandate disclosure of diluted earning per

share and information required by paragraph 48 for Level II and Level III
enterprises. Hence only Level I enterprises are required to apply AS 20
entirely without any relaxations.
 AS 29, Provisions, Contingent Liabilities, and Contingent Assets
 Paragraph 67 does not apply to Level II enterprises 
 Paragraphs 66 and 67 does not apply to Level II and Level III
enterprises.
 1] Attains Uniformity in Accounting
 Accounting Standards provides rules for standard treatment and recording of transactions.
They even have a standard format for financial statements. These are steps in achieving
uniformity in accounting methods.
2] Improves Reliability of Financial Statements
 There are many stakeholders of a company and they rely on the financial statements for
their information. Many of these stakeholders base their decisions on the data provided

Benefits of by these financial statements. Then there are also potential investors who make their
investment decisions based on such financial statements.

Accounting  So it is essential these statements present a true and fair picture of the financial situation
of the company. The Accounting Standards (AS) ensure this. They make sure the

Standards statements are reliable and trustworthy.

3] Prevents Frauds and Accounting Manipulations
 Accounting Standards (AS) lay down the accounting principles and methodologies that
all entities must follow. One outcome of this is that the management of an entity cannot
manipulate with financial data. Following these standards is not optional, it is
compulsory.
 So these standards make it difficult for the management to misrepresent any financial
information. It even makes it harder for them to commit any frauds.
 4] Assists Auditors
 Now the accounting standards lay down all the accounting policies, rules, regulations, etc
in a written format. These policies have to be followed. So if an auditor checks that the
policies have been correctly followed he can be assured that the financial statements are
true and fair.
5] Comparability
 This is another major objective of accounting standards. Since all entities of the country

Benefits of follow the same set of standards their financial accounts become comparable to some
extent. The users of the financial statements can analyse and compare the financial

Accounting
performances of various companies before taking any decisions.
 Also, two statements of the same company from different years can be compared. This

Standards will show the growth curve of the company to the users.

6] Determining Managerial Accountability
 The accounting standards help measure the performance of the management of an entity.
It can help measure the management’s ability to increase profitability, maintain the
solvency of the firm, and other such important financial duties of the management.
 Management also must wisely choose their accounting policies. Constant changes in the
accounting policies lead to confusion for the user of these financial statements. Also, the
principle of consistency and comparability are lost.
  The government of India and the Ministry of Corporate Affairs
brought out a notification related to the adoption and
applicability of Indian Accounting Standards by all companies
in India. This notification was brought through a legislative
enactment Companies (Indian Accounting Standards (IND AS))
Applicability Rules 2015.

of Ind AS  As per the above notification, all companies which receive this
notification would be required to adopt the Ind As in a phased
manner in the financial year 2016-17. Ever since the above
enactment, there have been three amendments in the
notification which occurred in 2016, 2017 and 2018.
Benefits of Adopting
Indian Accounting
Standards
Bodies that Govern
Applicability of Ind
As (Indian
Accounting
Standards)
 Phases of
Adoption of
Indian Accounting
Standards
  This phase is classified as the mandatory applicability of the
Indian accounting standards as required by the companies.
Such phase was implemented from 01 April 2016. Phase I
would be applicable to the following companies:
 Listed Companies (Companies that have their securities listed
in a recognised stock Exchange).

Phase I  Companies that have the net worth value of more than Rs. 500
Crore.
 Note- For the net worth application, the previous three years
financials of the company would be checked. As these
accounting standards were brought about in the year 2016-17,
the previous financial years i.e. 2013-14, 2014-15 and 2015-16
would be considered.
  In this phase all companies would have to adopt Ind AS (Indian
Accounting Standards) from 01 April 2017. Hence the next
financial year is considered for the applicability of Indian
Accounting standards. Phase II would be applicable to the
following companies:
 Listed Companies (Companies that have their securities listed
Phase II in a recognised stock Exchange- as on 31 March 2016.
 Companies that have the net worth value of more than Rs. 250
Crore but lesser than Rs. 500 Crore.
 Note- As these accounting standards were brought about in the
year 2016-17, the previous financial years i.e. 2013-14, 2014-
15 and 2015-16 would be considered.
  This phase is classified as the mandatory applicability of Ind As
by all forms of banks, NBFCs, SEBI regulated entities and
Insurance Companies. This phase would be applicable from 01
April 2018. Phase III would be applicable to the following
companies:
 Companies that have the net worth value of more than Rs. 500
Crore. Such net worth requirements would only be applicable
Phase III to such companies from 01 April 2018.
 The Insurance Regulatory and Development Authority of India
(IRDA/I) through a separate notification would ensure that the
insurance company meets the net worth requirement. NBFCs
and other financial institutions net worth requirement would be
checked by looking into the past three financial years i.e. 2015-
16, 2016-17 and 2017-18.
  This phase would only be applicable for all NBFCs whose net
worth is more than Rs. 250 crore but less than Rs. 500 crore.
Phase IV This Applicability would be considered from the period of 1
April 2019.
 Sr  IND AS Existing AS
  IND AS 1 AS 1
  Presentation of Disclosure of
Financial Accounting
Statements Policies

DIFFERENC 1 IND AS 1 deals

with presentation
AS 1 deals with
disclosure of
ES IN IND AS of financial
statements.
accounting
policies.
AND 2 Scope is wider. Scope is
comparatively
EXISTING AS narrow.
3 Explicit
statement in the
financial
statements of
compliance with
all the
Indian Accountin
g Standards.
 Sr  IND AS Existing AS
  IND AS 1 AS 1
  Presentation of Disclosure of
Financial Accounting Policies
Statements

DIFFERENC 6 Requires disclosure

of judgments made
ES IN IND AS by management
while framing of
AND accounting polices.
Also, it requires
EXISTING AS disclosure of key
assumptions about
the future and other
sources of
measurement
uncertainty.
7 Requires No specific
classification of restriction.
expenses to be
presented based on
 IND AS 2 AS 2
Inventories Valuation of
Inventories
1 Deals with the No such provision.
subsequent
recognition of
DIFFERENC cost/carrying amount
of inventories as an
ES IN IND AS expense,

AND 2 Provides explanation AS 2 does not

with regard to contain such an
EXISTING AS inventories of
service providers.
Explanation.

3 Explains that Does not contain

inventories do not specific explanation
include machinery in respect of such
spares which can be Spares.
used only in
connection with an
item of fixed asset
and whose use is
 IND AS 2 AS 2
Inventories Valuation of
Inventories
5 Provides detailed Does not deal with
guidance in case of such reversal.
subsequent
DIFFERENC assessment of net
realisable value.
ES IN IND AS Also deals with the
reversal of the write-
AND down of inventories
to net realisable
EXISTING AS value to the extent of
the amount of
original write-down,
and the recognition
and disclosure
thereof in the
financial statements
6 Excludes from its Excludes from its
scope only the scope such types of
measurement of inventories.
 IND AS 7 AS 3
Statement of Cash Flows Cash Flow Statements
IND AS 8 AS 5
Accounting Policies, Changes Net Profit or Loss for the
in Accounting Estimates & Period, Prior Period Items,
Errors and Changes in Accounting 
Policies
IND AS 10 AS 4
Convergence Events occurring after the Contingencies and Events
reporting period occurring after the balance
sheet date
IND AS 11 AS 7
Construction Contracts Construction Contracts
IND AS 12 AS 22
Income Taxes Taxes on Income
IND AS 16 IND AS 10 & 6
Property, Plant & Equipment Accounting for Fixed Assets
 Ind AS 21
The Effects of Changes in
Foreign Exchange Rates
Ind AS 23
Borrowing Costs
Ind AS 24
Related Party Disclosures
Convergence Ind AS 27
Consolidated and Separate
Financial Statements
Ind AS 28
Investments in Associates
Ind AS 31
Interests in Joint Ventures
AS 11
The Effects of Changes in
Foreign Exchange Rates
AS 16
Borrowing Costs
AS 18
Related Party Disclosures
AS 21
Consolidated Financial
Statements
AS 23
Accounting for Investments in
Associates in Consolidated
Financial Statements
AS 27
Financial Reporting of
Interests in Joint Ventures
 Ind AS 37 AS 29
Provisions, Contingent Provisions, Contingent
Liabilities and Contingent Liabilities and Contingent
Assets Assets
Ind AS 38 AS 26
Intangible Assets Intangible Assets
Ind AS 39 AS 30

Convergence Financial Instruments:

Recognition and
Financial Instruments:
Recognition and
Measurement Measurement
Ind AS 103 AS 14
Business Combinations Accounting for
Amalgamations
Ind AS 105 AS 24
Non-current Assets Held for Discontinuing Operations
Sale and Discontinued
Operations
Thank You