Convergence with IFRS:
Ind AS are largely aligned with IFRS issued by the International Accounting Standards Board (IASB), with minor carve-outs to suit Indian economic and legal environment.
Applicability:
Ind AS is mandatory for:
Listed companies and others with a net worth of ₹250 crore or more.
Holding, subsidiary, joint venture, or associate companies of such entities.
Voluntary adoption is also permitted.
Objective:
To ensure comparability, reliability, and transparency in the financial statements of Indian entities globally.
Authority:
Issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Ministry of Corporate Affairs (MCA) under the Companies (Indian Accounting Standards) Rules, 2015.
Structure:
As of now, there are 41 Ind AS notified and applicable.
| Ind AS No. | Title |
|---|---|
| Ind AS 1 | Presentation of Financial Statements |
| Ind AS 2 | Inventories |
| Ind AS 7 | Statement of Cash Flows |
| Ind AS 10 | Events after the Reporting Period |
| Ind AS 16 | Property, Plant and Equipment |
| Ind AS 18 (withdrawn) | Revenue (replaced by Ind AS 115) |
| Ind AS 32 | Financial Instruments: Presentation |
| Ind AS 33 | Earnings Per Share |
| Ind AS 36 | Impairment of Assets |
| Ind AS 109 | Financial Instruments |
| Ind AS 115 | Revenue from Contracts with Customers |
| Ind AS 116 | Leases |
| Aspect | Indian GAAP | Ind AS |
|---|---|---|
| Basis | Rules-based | Principles-based |
| Focus | Historical cost | Fair value accounting |
| Consolidation | Optional in some cases | Mandatory for group companies |
| Financial Instruments | Basic disclosure | Complex recognition, measurement, and disclosure |
Better access to global capital markets.
Enhanced comparability with international peers.
Improved investor confidence.
Strengthened corporate governance.
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Definition of Indian Accounting Standards (Ind AS)
Need for convergence with International Financial Reporting Standards (IFRS)
Role of ICAI and MCA in formulation and implementation
Uniform financial reporting
Global comparability
Enhanced transparency and reliability
Facilitating investment decisions
Phase-wise implementation:
Phase I: Listed and unlisted companies with net worth ≥ ?500 crore (from FY 2016-17)
Phase II: Other companies with net worth ≥ ?250 crore (from FY 2017-18)
Phase III: NBFCs in a phased manner (from FY 2018-19 onwards)
Applicability to:
Holding, subsidiary, joint venture, or associate companies
Voluntary adoption allowed
Based on IFRS, but with some carve-outs
Use of fair value accounting
Greater disclosure requirements
Principles-based approach
Here are some key standards:
| Ind AS | Title |
|---|---|
| 1 | Presentation of Financial Statements |
| 2 | Inventories |
| 7 | Statement of Cash Flows |
| 10 | Events after the Reporting Period |
| 12 | Income Taxes |
| 16 | Property, Plant and Equipment |
| 19 | Employee Benefits |
| 21 | Effects of Changes in Foreign Exchange Rates |
| 24 | Related Party Disclosures |
| 33 | Earnings Per Share |
| 36 | Impairment of Assets |
| 37 | Provisions, Contingent Liabilities, and Contingent Assets |
| 38 | Intangible Assets |
| 109 | Financial Instruments |
| 115 | Revenue from Contracts with Customers |
| 116 | Leases |
| Feature | Indian GAAP | Ind AS |
|---|---|---|
| Concept | Rule-based | Principle-based |
| Valuation | Historical cost | Fair value basis |
| Consolidation | Optional in some cases | Mandatory |
| Revenue Recognition | Based on risk and reward | Based on transfer of control |
| Financial Instruments | Basic treatment | Complex and comprehensive |
Enhances credibility of Indian companies in global markets
Improved corporate governance
Better comparability for investors and stakeholders
Encourages transparent and accountable reporting
Complexity of standards
Requirement of expert knowledge
System and process overhaul
Higher compliance costs initially
Voluntary vs mandatory adoption
First-time adoption considerations (Ind AS 101)
Adjustments from Indian GAAP to Ind AS
Disclosure requirements during transition
Ind AS is a significant step toward globalization of Indian financial reporting
It enhances transparency, accountability, and investor confidence
While challenges exist, long-term benefits outweigh them
| Dolphy D Souza Indian Accounting Standards |
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