6

nternational Financial
Reporting Standards ((FRSs)/Ind-AS
BACKGROUND
International Financial Reporting Standards
International Accounting Standard Board (IFRSs) are the globally accepted accounting standards adopted by
(IASB) from
1973-2000). IASC was established in 1973 to formulate International Accounting Standard Committee (IASC
or and publicise in
to be followed in the
preparation of financial statements andprepare
to
public interest, the standards
countries of the world. The standards issued promote their acceptance and adoption by different
Standards (IASs). by the Board of IASC are designated as International
Accounting
International Accounting Standards Committee was
Standard Board (IASB) was formed and suspended in the year 2001 and International
given the responsibility of setting accounting standards. IASB Accounting
all the standards issued
by the Board of IASC and these accounting standards adopted
continue to be designated as International
Accounting Standards (IASs). IASB has replaced some IASs with new IFRSs and has adopted new IFRS on
for which there was no topics
previous IAS. The conversion of IASs into IFRS are still in process.
oMEANING AND FEATURES
Meaning: IFRSs is a set of accounting standards, that is, a series
Accounting Standard Board explaining how different types of ofbusiness
pronouncements (opinions) issued by International
transactions and events should be
in financial
statements. It also includes guidelines and reported
1S to interpretations approved by IASB. The main goal of IFRSs
permit international comparisons possible.
Features: The main features
of IFRSs are explained as under
)IFRSs principle-based accounting standards as compared to rule-based accounting standards. It means
are
that thecompanies have to report the essence of each small transaction which is to be
and approved. In this manner the transaction cannot be finally audited
manipulated easily.
Note: Rule-based accounting standards like Indian Accounting Standards are
attempt to deal with all types of situations.
long and complex which
11) IFRSs are drafted in a lucid
(clear and simple) language and are easy to understand and apply.
(1i) IFRSs emphasise that the treatment of various transactions should be based
on their economic
rather than their legal form. For instance, in a hire purchase transaction, the hire substance
the hire
purchaser can record
purchase asset at its total cost rather than its instalments actually paid.
v) Under the IFRSs, the historical cost concept of recording the
cost
fixed assets has been replaced by current
system for a more accurate and realistic financial position of the business enterprise.
) Under IFRSs, the assets, liabilities, revenuesand
expenses
are reported not in
local currency but in its
functionalcurrency; it means the currency of the place or environments where the entity
operates which
may be different from the local currency of the country.
 Financial Accounting: Concepts and Annt
6.2
Application
be reassessed
or computed again
and again
ntil the asset
until u

the assets has to

(vi) Under IFRSs the useful life of
books of account.
is actually removed from the Accounting. The accountant
m has to .

FRSs make it compulsory or mandatory

adopt Component
to
in relation to its total cost an i
Vl) component of equipment
record of cost of a significant is not calculated simply on the totsg
a separate It means that the
depreciation expense in the c
depreciation separately. asset. For example
parts of the equipment or
of an asset but the
on the cost of important
for its wheels and the main bodO of the
depreciation may be calculated separatly
Railway Coach,
coach respectively.
Act is based on the IFRSs relating to the Preses
It may be clarified that the Schedule III of
the Companies ntation
of Financial Statements. Accordingly,
current and non-current groups as against the
and liabilities have been divided into
e

(a) the assets

presentation on the liquidity basis.

functional grouping of production ex Den.
the statement of profit and Loss is also based on
(b) administrative expenses and selling and distribution expenses. So, it is the case with the classificanses,
ion
of revenue items.

NEED FOR IFRSs

The financial statements, compiled from financial information, are useful only if they are reliable, relevant and
comparable in respect of operating results (i.e., performance) in the form of profit or loss and also financial
position based on true or proper valuation of a business entity or enterprise. Due to globalization, foreign capital
has made in roads into domestic markets. This has led to failure in comparison of financial statement of companies
of different countries. In order to have one accounting language for business transactions, many countries have
switched to IFRSs. Such qualities would prove helpful to the users of the financial statements or
accounting
information in making financial decisions as to whether to invest or not; whether to
supply goods on credit or
not; whether to grant loan or not and so on. The financial statements, therefore, would be
informative too for
the shareholders and the public. For the past few years the
professional accounting bodies or institutions have
developed their own local Generally Accepted Accounting Principles (GAAPs) like US GAAPs U.K. GAAPs or
Accounting Standards (AS) in India. The financial statements prepared on the basis of local GAAPs or
standards fail to present a uniform picture of accounting
performanceand financial position of even the companies in the
same industry. This has made the users confused. Such a situation is not conducive for globalization process in
which the funds or capital must come from outside the
boundaries or borders of individual countries.
Corporate sector needs urgently the convergence of Indian
consistency to the field of accounting. A strong need for Accounting Standards with IFRSs because it brings
comparability, transparency, rationalization and adaptability adoption of IFRSs is that it would
bring uniformity
in financial statements besides the
rules for the preparation and
presentation of the same (the financial statements). tough or rigid
The investors and creditors are not
very happy and infact feel frustrated when
or financial
reports using different accounting standards. It must be companies prepare financial statemens
standards, like IFRSs can make the world' made clear that high
capital markets more efficient. The quality accounting
the investors and creditors to compare financial statements process of will allow
without adjusting for national convergence
Specifically the need for accounting differences
accounting standard convergence arises from the
reasons
following and
genuine pressilug
() Easy access global international capital markets: In
to or

growth or expansion, companies have to look beyond the order to mobilise or raise more
investors rely on IFRSs boundaries of their capital
compliance financial statements. In fact a respective countries. Forel
standards is a prerequisite (necessary financial reporting system of
the local or say Indian Financial condition) for attracting foreign investors
in the country.
globa
Statements will be liked by the Hene
to have more business
collaborations or joint ventures because offoreign investors and would enable the
(ii) Low cost of raising funds abroad: At greater transparency in business
present the
companies have to
dea
one set based on local
GAAPs or standards and another set prepare two sets of financial stateme
conversions to US GAAPs or U.K. GAAPs, as of financial
the case may be. The statements on the basis
would require less number IFRSs based financial
of chartered accountants and the financial stateme
statements could be prepared
International
ancial Reporting Standards 6.3
lesser cost. Better access to (IFRs)/Ind-AS
iFkSS are now
and reduction s as
accepted as a ction in cost of capital raised from
cost of
capital global capital markets ar funds
overseas or abroad. nancial reporting system
iro
for businesses seeking to raise
(it) Easy comparisons: The
common platform and wouldadoption of IFRSs brings companies or io
business entities o
and disclosure standards will increase umiformity in accounting
enable all
easily the performance of various stakeholders principles.
or users of 1ne
accounting into tion to understandd
business entities and make
(iv) True or fair
valuations : The
term fair value is
comparisons across industnes a
sold in the market. used to estimate the value at which the asset
Many multinational corporations or companies
still failing because of erroneous or failed in the past e.g.,
could D
between Indian Acounting Standards
Enron ana
incorrect valuation of their assets and liabilities. There is a wide
and U.S. GAAPs in the gap
Standards (ASs) in India valuation process. For example,
permit valuation of assets on the basis of historical cost. But U.s.Accounting
costing onmarket-to-market basis is in fair
van
practised.
for the valuation of assets and liabilities. IFRSs would create a common or uniform proceaure
(v Better quality of financial
reporting: The adoption of IFRSs would result in uniformity in
information and it would automatically result in better quality of financial accounting
IFRSs is to improve the quality of financial reporting. The rationale of
reporting.
(vi) Increased trust and reliance: Adoption or
implementation of IFRSs in different countries including
India would lead to increased trust and reliance
placed by investors, financial analysts and other users
of accounting information in financial statements of the
as standard reporting method or framework
companies.The reason is that IFRS is treated
for the preparation of credible financial statements.
(vii) Difficult to commit fraud: Traditional rule-based system of accounting has many loopholes which make
it easy to commit frauds. The major example is that of U.S. multinational company, Enron wherein it
was possible to commit al frauds they wanted to by citing their own rules for recording the transactions
and by following minimum technical requirements. On the other hand, the IFRSs require the companies
to report the essence of each minute or smallest transaction which is to be finally audited and approved.
(vii) No multiple reporting: At present the companies located in different countries have to prepare a dual
or double set of financial statements for external reporting, i.e., one set of financial statements for use
in the home country and the other set for the foreign country where it has also business interest or where
it operates. But if IFRSs are implemented, it would eliminate this multiple reporting.

sOME CLARIFICATIONS

1. Whether the converged standards will be called as IFRSs in India?

is : Ind-AS. The financial statements
The answer is No. The proposed name for converged standards in India
called as India-AS Financial statements.
prepared under these converged standards will be
2. What is the status of existing accounting standards? What would happen to the already notified accounting

standards?
will continue to be in force. These accounting
The existing set of Indian Acounting Standards (ASs)
which are not required to migrate (shift) to
standards will be applicable to those entities (enterprises)
Indian equivalents to - IFRSs Ind-ASs

OF CONVERGENCE TO IFRSs
BENEFITS
well as the accounting professionals
general and investors, industry
as

nvergence with IFRSs helps the economy in

in particular.

benefits of convergence are described below

:
he
will benefit the economy by increasing growth of its international
()
Benefits to economy : Convergence capitalefficient markets and also helps
of orderly (well organised) and
encourages international investino
business. It facilitates maintenance
economic growth. It
to increase the capital formation
and hence the
flows in the country.
and leads to more foreign capital
thereby would provide
with IFRSs
and comparability
transparency
Convergence because of common standards
Transparency and comparability: Iransparency 1s provided
O
overall performance.
the companies' activities and
6.4 Financial Accounting: Concepts and Applications

Since the IFRSs have universal or global applicatin

ud comparability in each country, industry and company. investors and companies. The nations will ha
Telationship can be built across the world with suppliers, nave
O move along with others as their business relationships are also global or international.

Investors want accounting information

that is more relevant,
reliable, timel.
Benefits to the investors:
and comparable across the world. Financial statements prepared on a common set of accounting standard.
(TFRS) would help the investors to better understand investment opportunities as against the financial
of national local accounting standards.
statements, prepared using a different set or

iv) Easy acess to international capital markets : Convergence to IFRSs would definitely help the Indian
companies to have easy access to international capital markets. Several domestic companies are mobilising
globally huge financial resources to meet their funds or capital requirements. Today most of the stod
exchanges demand information as per IFRSs and convergence to IFRSs would enable Indian companie
to access the global financial markets easily
()Lower cost of capital: Cost of raising capital or funds can be minimized under IFRSs as there is no
no
need to prepare a dual (double) set of financial statements.
(vi) Benefitsto industry : The industry can raise capital from foreign markets if it can create confidence in
the minds of foreign investors that their financial statements are IFRSs complied. With the differences
in the accounting standards from country to
country, the multinational companies face a multitude of
accounting requirements prevailing in different countries. The burden of financial reporting is lessened
with adoption or convergence of
accounting standards because of low cost of preparing the financial
statements.
(vii) Eliminating the need for multiple reporting: The task of maintaining different set of financial
and statements be eliminated reports
can
by adopting provisions under IFRSs by all group enterprises.
the
(vii) Benefits to companies: IFRSs provide improved
On implementation by
management information which facilitates decision making
companies, it brings out better access to foreign capital and facilitates the
of mergers and process
acquisitions.
(ix) Benefits to accounting professionals :
Adoption or convergence with IFRSs also benefits the accounting
professionals in a way that they are able to sell their services as
experts in different of the world. It
offers them more
opportunities in any part of the world if uniform accounting practicesparts
the world. prevail throughout
(x) New opportunities:
Advantages of convergence with IFRSs will not be restricted to the Indian
sector only. It will
perhaps open up plethora or abundance of opportunities in services sector corporate
and insurance. With a wide like banking
pool accounting professionals, India can
of
hub (centre or focal emerge as an accounting services
point) for the world community. As fair price valuation is the central theme ot
IFRSs, it can provide lot of new
opportunities to the chartered accountants and cost accountants.
PROCEDURES
The dictionary meaning of the word 'procedure' is: the
way of doing somethong.
In the context of IFRSs, it
means how
Financial particular country can implement or
a

Reporting Standards (IFRs). comply with the Internationa

There are two alternative
(i) Adoption or (ii) procedure available to a country for compliance or
Convergen ce. implementation of IFRSs, namely
Meaning of IFRSs Adoption
Simply stated IFRSs adoption means
does not accepting or endorsing an 1FRS in its
permit any change in the language or format of IFRS framed original form. It means adopto
possible to adopt IFRSs in its by IASAB. In Indian context it is
Ind-AS. In Indian context origional form but to accept converged not
accounting standards which are callc
convergence means adoption of IFRSs with suitable
Meaning of Convergence with IFRSs modification.
In
general terms, convergence means to
terms the convergence with IFRSs is achieve harmoney or coordination
with IFRSs. In
considered or translated as: specific or prec
 dernation al Financial Reporting Standards 6.5
design and
(IFRSs)/Ind-AS
uTo
in
maintain national accounting standards in
accordance with rej red
in toto or completelynational
way that the financial
are left accounting standards draw
a
s
with no unreserved statement ot co
disclosing their financial statements" choice but to adopt IERS in
td and
toto completely while prep
or

Cia India has decided to go tor convergence route. The

Institute of Chartered Accountants of India
that the convergence with IFRSS does not mean adoption (ICAI), has d
the International of IFRSs in toto. ICAI has cited statement clan
dh
Accounting Standard (IAS): I Presentation of Financial
not be described as giv a

complying with IFRSs unless they Statement: "Financial Statement 1all

sie
comply with the requirement of
Therefore it does not mean or imply that financial IFRSS
statements prepared in accordance with the national
standards draw unreserved statement of
In other words the IAS - I has not used the words with IFRSs only when IFRSs, are adopted wordaccounting
compliance by word
'unreserved statement of compliance.
ICAI has further clarified the International
Best Practices: Working Relationships between Accounting Standard Board (IASB) accepted in its "Statement of
the IASB and other
requirement or removing optional treatment does Accounting Setters" that:
not create
"adding disclosure
to remove optional treatments from IFRSs. non-compliance with IFRSs. Indeed the IASB aims

The above mentioned statement makes it clear that if a

country wants to add disclosure that is considered
a
necessary in the local environment (or condition) or
non-compliance with IFRSs.
removes optional treatments, this will not amount to
So in the Indian context convergence with IFRSs means adoption of IFRSs with modifications where
necessary.
The Accounting Standard Board (ASB) of India has
already issued the drafts on all of the converged
standards i.e. Indian Standards equivalent to IFRSs. Once these standardsexposure
these will be sent to National Advisory Committee on
are approved by theCouncil of ICAl,
Accounting Standards (NACAS). On approval the same
will need to be notified in the official gazette. It means the same
in the case of existing accounting standars (AS).
procedure would be followed as is being done

IFRSs/ind-AS that are currently applicable

The list of IAS/IFRSs and corresponding Ind-ASs notified by MCA is given below:

IAS No. Title Corresponding Converged Ind AS

IASI Presentation of Financial StatementsInd AS 1
LAS 2 Inventories Ind AS 2
IAS 7 Cash Flow Statements Ind AS 7
IAS8 Ind AS 8
Accounting policies, change in accounting estimates and errors
TAS10 Events after the Balance Sheet date Ind AS 10
IAS 11 Construction Contracts Ind AS 11
IAS 12 Income Taxes Ind AS 12
IAS 16 Property, Plant and Equipment Ind AS 16
IAS 17 Ind AS 17
Leases
IAS 18 Revenue
Ind AS 18

IAS 19 Ind AS 19
Employees Benefits
IAS 20 Govt. Grants and Disclosure of
Government Assistance Ind AS 20
Accounting for
IAS 21 The Effects of Changes in the Foreign Exchange Rates Ind AS 21
IAS 23 Ind AS 23
Borrowing Costs
IAS 24 Ind AS 24
Related Party Disclosures
IAS 26 Retirement Benefits Plan
Ind AS 26
ACcounting and Reporting by
IAS27 statements Ind AS 27
Consolidated and separate financial
 6.6
Financial Accounting: Concepts and
IAS 28
IAS 29
Investments in associates Ind AS 28
Application
Financial Reporting in Hyper Inflationary Economies Ind AS 29
IAS 31
Interest in Joint Ventures
Ind AS 31
IAS 32
Financial Instruments: Presentation Ind AS 32
IAS 33
Earnings Per Share Ind AS 33
IAS 34
Interim Financial Reporting Ind AS 34
IAS 36
Impairment Assets Ind AS 36
IAS 37
Provisions, Contingent liabilities and Contingent Assets Ind AS 37
IAS 38
Intangible Assets Ind AS 38
IAS 39 Financial Instruments: Recognition and Measurement Ind AS 39
IAS 40 Investment Property Ind AS 40
IAS 41 Agriculture Ind AS under
preparation
IAS 3, 4, 5, 6, 9, 13, 14, 15,22,25,30 and 35 have been
superseded.
International Accounting Standard Board (IASB) is now issuing International Financial Reporting Standari
(IFRSs): LIASB has issued the following IFRSs:
IFRS No. Title
Corresponding Converged Ind As
IFRS-1 First time adoption of IFRS
Ind AS 101
IFRS-2 Share based payments Ind AS 102
IFRS-3 Business combination Ind AS 103
IFRS-4 Insurance contracts
Ind AS 104
IFRS-5 Non-current assets held for sale and discontinued
operations Ind AS 105
IFRS-6 Exploration for and evaluation of mineral resources
Ind AS 106
IFRS-7 Financial instrument: disclosure
Ind AS 107
IFRS-8
Operating segment Ind AS 108
IFRS 9 Financial instrumentsS Exposure Draft issued
IFRS 10 Consolidated Financial Statement
Exposure Draft issued
IFRS 11 Joint Arrangement -do-
IFRS 12 Disclosure of Interest in Other entitles
-do-
IFRS 13 Fair value measurement
No Corresponding standard
IFRS 14 Regulatory Deferral Accounts Exposure Draft issued
IFRS 15 Revenue from Contracts with Customers
Exposure Draft issued
IFRS 16 Leases Exposure Draft issued
IFRS 17 Insurance Contracts
Exposure Drait issued
The title of this standard is First Time
Adoption of Indian
Accounting Standards
sCHEDULE II OF COMPANIES ACT 2013

Schedule III of companies act 2013 is

compatible with the Ind AS 1, Presentation of Financial Stateme
ents

(Corresponding to IAS 1).

DIFFICULTIES OR CHALLENGES IN ADOPTING IFRSs

India faces various difficulties or
challenges in adopting IFRSs. because of variances or differences between Indian
Accounting Standards (ASs) and IFRSs. These include the following:
() Concept: IFRSs are more
principle-based and allow ancial
more flexibility to the preparers of the fina
International Financial Reporting Standards 6.7
(IFRSs)/Ind-AS
statements. Thus there is scope a
of subjective judgement
statements is presented onthesSubjective the information in
iudgement with the result the the cial
more desired results to the
more desired results to the satisfaciSbstance rather than rule. In this way financial statements proviu
satisfaction of the
Preference Shares are treated investors and
as
liabilities because of theircreditors. For example
under ir trned to the
preference shareholders after a certain period of nature since the money
has tO
part of equity share capital as they will time. Similarly, the convertible debentures
arcu pes.
remain with the
On the other hand Indian company for the period equity share capta
the choice of reasonable Accounting Standards
(ASs) are rigid because they are and
judgement is almost absent, As rules-
play the major role, flexibility or baseu
judgement is not
permitted in Indian ASs. For rules
of share capital though the example the Redeemable Preference Sharessubyeu are par
money has to be returned after
treated liability in all cases whether the debentures are
certain years. Similarly debentures are
convertible or non-convertible.
(i) Legal requirements: Application or use of IFRSs is
whose interests are given purely based on the need and requirements of
priority over law. In fact law is made in
accordance or conformity with investor s
In Indian Accounting Standards IFRKSS.
needs. Different regulatory bodies
(ASs) the legal
requirements get priority or preference over
or demand the along with Companies Act, Banking Companies Act investors
organisations governed by them to
etc. require
per their norms or rules. For example the prepare and present their financial statements as
as per Schedule III of the
financial statements of joint stock
Companies Act 2013; the financial companies must be prepared
as per Banking statements of banking
Companies Act
Companies Act and in the case of insurance
be in accordance with the norms or
rules prescribed by Insurancecompanies financial statements should
(IRDA) Regulatory and Development Authorityy
(iii) Framework or structure : IFRSs
for setting standards has been
provide a wide framework for financial reporting where a clear
provided. In the framework given by IFRSs, Assets, Liabilities andguidance
(share capital) are clearly defined. Equity
But no such framework is
present for Indian Accounting Standards where components of financial
statements are clearly defined.
geud nescl abrebos
(iv) True and fair view: In IFRSs based financial statements the valuation
of fair value that is on market to market value basis. Thus the ture and of assets is based on the concept
and IAS I also fair concept has no relevance
ignores this concept.
-

In India
accounting is done on historical
cost basis. So there is an
emphasis on the concept of true
and fair view. In fact the
shall
Companies Act specifically
states that: "Every Balance Sheet
of company
give true and fair view of the state of affairs of the
and company
Loss of every Statement of Profit and
company shall give a true and fair view of the profit or
a
loss of the company. Thus Indian
Accounting Standards do not allow that concept of true and fair view be ignored.
() Presentation International
Accounting Standard 1: Presentation of financial statements clearly
provides guidelines and overall requirements in
certain information in
presenting financial statements of companies. It requires
respect of operating and investing activities, discontinued operations,
activities and equity. financing
Accounting Standard (AS) -

I : Disclosure of Accounting Policies does not define clear

for disclosure in the financial statements. Different regulatory bodies also requirements
provide a format for the
organisations regulated by them. For companies, Schedule III of the
the format for the Companies Act 2013 prescribes
Balance Sheet and Statement of Profit and Loss. For insurance
companies, Insurance
Regulatory And Development Authority (IRDA) specifies how the financial statements will be prepared,
dition
of IFRSs:
to the above, the
following points must also be seriously considered for the proper implementation

Training : For successful implementation of IFRSs there is urgent need to train teachers,
tax
professionals etc. There is a also need for introducing
students, auditors,
a
lFKSs as full subject in universities and chartered
aCcountancy syllabi. There is an urgent need to build adequate IFRS skills among Indian account
Poessionals to manage the conversion projects for Indian Companies. ing
 6.8 Financial Accounting: Concepts and Applice

(i) Taxes: The IFRS convergence will have significant effect on financial statements and consequent
cations
tax liability because of true and fair valuation process. So the tax authorities should ensure
sure that
that thO
there i
a clarity on the tax treatment of items arising out of convergence to IFRSs.
(in) Communication: It is important to educate the financial analysts in managing market expectations he
IFRSs may considerably change reported earnings and various performance indicators or ratios, xpectations because
(iv) Distributable profits: Unrealised profit or loss is another issue in the convergence with IFRS
IFRSs are based on fair value concept, it is difficult to ignore this concept. It will have to beene
that distribution of unrealized profit does not lead to the reduction in share capital.
(v)Information Systems: Under IFRSs converged accounting standards, information must be collected f
every section of the organization and used for disclosure purposes. In such situations, business
need to increase their Information Technology (IT) security, in order to minimize enternrfrom
potential fraud, cu.
terrorism and data corruption. yber
INDIAN ACCOUNTING STANDARDS (IND-AS)
Each country has its own set of rules and
regulations for accounting and financial reporting. When an enterprise
to raise funds from foreign market/investors, the rules and decid,
will require that the enterprise is in a regulations of investor's country will apply and this in turn
position to understand the differences between the rules governed by
for financial reporting as
compared its own country of origin. Therefore translation and re-instatementsforeign
to country
are of utmot
importance in a world that in rapidly globalizing.
Internationally the investors and financial analysis prefer to compare financial statements based
standards and this has led the on similar
accountino
growing support for an internationally accepted set of
harmonization of financial accounting
reporting all over the world will definitely help to raise faith and standards. The
specially for making their decisions and assess their risks. confidence of investors
In Indian context it was also not possible to adopt
due to deviations in various factors like economic globally accepted accounting standards i.e. IFRSs in its original form
environment, legal requirements,
deviations in various factors global standards have been political environment etc. Due to
accepted in India but after making
the requirements of economic conditions and legal some modifications as
positions (Tax Laws). per
Meaning of Indian Accounting Standard
(Ind-AS)
Indian Accounting Standard (Ind-AS) are
government of India under the supervision converged International Financial
Reporting Standards
Accounting standards board (ASB) of ICAI(IFRSs)
and control of issued by the
with National Advisory Committee of and
Standard (NACAS) recommend these Accounting
standards
Standard (NACAS). National
Advisory Committee
in consultation
accounting standards applicable for to
ministry of corporate affairs (MCA). MCA on Accounting
companies in India. has to spell out the
The Ind-AS are named and numbered in
the same way as the
List of Ind-AS corresponding IFRSs.
101
First Time
102 Adoption of Indian Accounting Standards
Share Based Payment
103 Business Combinations
104
105 InsuranceContracts sor
lbsbeansg e
s
106
Non-current Assets Held for
107
Exploration for and EvaluationSaleof and Discontinued Operations
Financial Instruments: DisclosuresMineral ResourcesR
108
109 Operating Segments asgaet pt
l10
Financial Instruments
111 Consolidated Financial Statements
Joint Arrangements
112
Disclosure of Interests in
Other Entities
International Financial Reportin
Standards
113 Fair Value Measurement (IFRSs)/Ind-AS 6.9

114 Regulatory Deferral Accounts

1 Presentation of Financial
Inventories
Statements
Statement of Cash Flows
8 Accounting Policies, Changes in
10 Events after the
Reporting Period
Accounting Estimates and Errors
Construction Contracts
12 Income Taxes
16 Property, Plant and
Equipment
17 Leases
18 Revenue
19 Employee Benefits boreibeohoe
20 Accounting for Government Grants and Disclosure of
21 The Effects of Changes in Government Assistance
Foreign Exchange Rates
23 Borrowing Costs
24 Related Party Disclosures GMAT2 2TUOD2A
27 Separate Financial Statements MAIGAL R0 VTEAADLISA
28 Investment in Associates and Joint Ventures Guon
bsd210 ai (ADM) ztA strro
29 Financial Reporting in
Hyperinflationary Economies
ssila ga brs seilqobssdl bolsog
32 Financial Instruments: Presentation olh tamerk 99t boue ont 2si ADM slt T-B0bene
33 Earnings per Share o d nod sraif orit abusbase vllsoiand sg 2A bal dT 2sln0
34 Interim Financial Reporting sldiuepoos glladolg so olorg
36 Impairment of Assets boarginoo er won dony isdolg obiwnsl a srd aslnsqnu ethtd aaa
37 Provisions, Contingent Liabilities and Contingent Assetsolenrt fipe lalaseabrabnsnel e e e t n d
38 Intangible Assets
40 Investment Property nolbs
41 dAgriculture o o u s toosl ch-bal o s3ngoros selw-sesrly s balion at 2oM
d nirus
DISTINCTION BETWEEN INDIAN ACCOUNTING STANDARDS (IND AS) AND
ACCOUNTING STANDARDS (AS)

India has followed the policy of convergence with the International Financial Reporting Standards and the Indian
Accounting Standards so formulated are called Ind As. The Institute of Chartered Accountants of India (ICAI)
examines and considers the legal or regulatory framework and economic environment in India while formulating
Ind As. The main points of distinction between Ind AS and AS are given below :

1. AS were based on International Accounting Standards (IAS) formulated by International Accounting Standards
Board (IASB). But the Ind AS are based on standards issued by International Financial Reporting Standards
Board.
Standards with
of International Accounting
Accounting standards were mainly adopted on the basisrelevant the
of the International Accounting Standards. But
result that those were primarily a reproductionthe International Financial Reporting Standards keeping
Ind As are based on the convergence with
the
n mind the legal, economic and social environment in the country. od fsd gsdtol boboda
3. complex and with avoidable details. But Ind As
Ccounting standards are rule based which long, are
ate principle based. Ind As report only the essence of each small transaction which is finally audited.

A S are drafted in in technical language with more than one option as in the case of Accounting Standard
1 inventory valuation. But Ind As are drafted in a lucid (simple and clear) language.

5. the Council or ICAl while the Ind As require

Acco standards are issued under
the authority of
ecounting
notification from Ministry of Corporate Affairs for date of issue of various Ind As. a n
 6.10 Financial Accounting: Concepts and dns

6.
Ind As are based on the concept of fair value of fixed assets. The term fair value1S used to estimat
value at which the asset could be sold in the market. But the Accounting Standards follow the a
age od
concept of historical cost.
7. Ind As will ensure that there is no multiple reporting for companies located in differerent countries
and the other set for the foreign countr
use one set of financial statements in the home country are based on Accounting Standards
multiple reporting has to be done when financial statements mainly
because of historical cost concept.
8. AS are rule based system of accounting and hence responsible for many frauds. But Ind AS are Dri
based and require the companies to report the essence of each smallest transaction which is finally a
and approved.
audite
9. AS are not treated with trust and reliance by the international investors. But Ind As based on Int.
Financial Reporting Standards would lead to increased trust and reliance because IFRS is treated as et
financial statements. ar
reporting method or framework for the preparation of credible
10. AS do not ensure uniformity in accounting information. But Ind As would ensure the improvement
ent and
quality of financial reporting.

APPLICABILITY OF INDIAN ACCOUNTING STANDARDS (Ind-AS)

The Ministry of Corporate Affairs (MCA), in 2015, had notified the Companies (Indian Accounting Standards (Ind-A
Rules 2015, which stipulated the adoption and applicability of Ind-AS in a phased manner beginning from the Accounting
period 2016-17. The MCA has since issued three Amendment Rules, one each in year 2016, 2017, and 2018 to amend the
2015 rules. The Ind-AS are basically standards that have been harmonized with the IFRS to make reporting by Indian
companies more globally accessible.

Since Indian companies have afar wider global reach now as compared to earlier, the need to converge reporting standard
with international standards was felt, which has led to the introduction of Ind-AS.

Phases of Adoption

MCA has notified a phase-wise

convergence to Ind-AS from current accounting standards. Ind-AS shall be adopted by
specific classes of companies based on their Net worth and listing status. The phases of implementation of Ind-AS are as
follows:
TRUO
Phase I

Mandatory applicability of Ind-AS to all companies from 1st April 2016, provided:
.It is a listed or unlisted company
Its Net worth is greater than or
equal to Rs. 500 crore
Net worth shall be checked for the
previous three Financial Years (2013-14, 2014-15, and
Phase II 2015-16).
Mandatory applicability of Ind-AS to all companies from 1st
.It is a listed company or is in the April 2017, provided:
process of being listed (as on
.Its Net worth is greater than or 31.03.2016)
equal to Rs, 250 crore but less then Rs. d
periods). 500 crore (for any of the below menu
Net worth shall be checked for the
previous four Financial Years
Phase III (2014-14, 2014-15, 2015-16, and 2016-17)
Mandatory applicability of Ind-AS to all Banks,
NBFCs, and Insurance
.Net worth is more than or equal to INR 500
crore with
companies from 1st April 2018, whose:
effect from 1st
rance Regulatory and April 2018.
Development Authority)
Tcurance Companies with etect Irom 1st 2018, NBFCs India shall notify the separate set of
of
italists, etc. Net Worth shall bDe Checkea April Ind-AS for
tOr the
include core
past 3 financial investment companies, stock brokers,Da venture

years&2015-16, 2016-17, and 2017-18).

 International Financial Reporting Stan dards (IFRSs)/Ind-AS 6.11

Phase IV

All NBFCs whose Net worth is more than or

equal to INR 250 crore but less than INR 500 crore shall navc
mandatorily applicable to them with effect from 1st April 2019.
Note: If Ind-AS becomes applicable to any company, then Ind-AS shall
automatically be made applicable to all the subsidiaries
holding companies, associated companies, and joint ventures of that company, irrespective of individual qualification or
such companies.
Net Worth Calculation: Net worth will be calculated using the company's stand-alone records as of March 31, 2014, or the
first audited period ending after that date. After deducting accumulated losses, postponed spending, and miscellaneous
expenditure that has not been written off, net worth is the sum of paid-up share capital and all reserves from the profit and
securities premium account. Only capital Reserves derived through promoter contributions and government grants can be
included. Reserves resulting from asset revaluation and written-back depreciation cannot be included.
Voluntary adoption: Companies may voluntarily include Ind-AS in their reporting for fiscal periods beginingon or after
2015 or later,
2015. Such firms must include a comparison report in their reporting for the periods ending 31 March
April 1,
if Ind-AS have been incorporated to present a comparative view, However, once a corporation has begun reporting in
accordance with the Ind-AS, it cannot revert to previous laws.
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