Overview About IFRS and Ind AS

 

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International Financial Reporting Standards (IFRS) set basic guidelines of financial reporting so that the financial statements of a company can be reliable, transparent, and are comparable across the other companies around the globe. Prior to IFRS, every country has different Generally Accepted Accounting Principles (GAAP) for the businesses to prepare financial statements in their own country. With globalization, it was becoming difficult to undertake cross border transactions, because it was difficult to understand financial statements prepared in different GAAP. To bring harmony in the accounting language, the International Accounting Standards Committee (IASC) started developing the International Accounting Standards (IAS) from the year 1973. The International Accounting Standards Board (IASB) took over the functions from IASC in July 2000. Since then a set of common reporting standards is referred to as IFRS. IFRS has picked up some foothold over the most recent few years, which is vindicated by the way that around 144 out of 166 jurisdictions of the world have adopted IFRS for all or most domestic publicly accountable entities (listed companies and financial institutions).

IFRS are principle-based standards as against rule-based standards. It allows entities to make estimates and judgments based on size and circumstances of the business. There are total 41 reporting standards and 18 interpretations in the set of IFRS, as mentioned below:

A – Guidance issued by IASC before July 2000 and later on adopted by IASB

  • International Accounting Standards (IAS): IAS 1 to 41 (Total 24 standards)
  • Standard Interpretation Committee (SIC) – (Total 5)

B – Guidance issued by IASB after July 2000

  • International Financial Reporting Standards (IFRS): IFRS 1 to 17 (Total 17 standards)
  • IFRS Interpretation Committee (IFRS IC) – (Total 13)
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IFRS in India

India has not adopted IFRS as is, however, decided to adopt reporting standards which are based on IFRS. In India, those standards are called as Indian Accounting Standards Converged with IFRS (Ind AS).. Ind AS is framed with minor deviations in IFRS, called as carve outs. Ind AS is applicable to a certain set of companies from the year 2016-17. Ind AS road map in India is as below:

Mandatory Adoption

Companies (other than banks, NBFCs and Insurance Companies):

  • Listed Companies or Companies in the process of the Listing (debt or equity listed in or outside India).
  • All other unlisted Companies having net worth of INR 250 crores or more.
  • Holding, Subsidiary, joint venture or associates of companies covered above.
  • Companies newly satisfying the threshold above will comply with Ind AS immediately from subsequent year

NBFCs (NA to banks and insurance companies either voluntarily or statutorily):

  • Listed NBFCs or NBFCs in the process of Listing (debt or equity listed in or outside India).
  • All other unlisted NBFCs having net worth of INR 250 Crores
  • Holding, Subsidiary, Joint venture or Associates of companies  covered above
  • By 31 March 2020, all the Companies and NBFC’s above are required to comply with Ind AS. Not applicable to banks and insurance companies

Voluntary Adoption

Companies can voluntarily converge with Ind AS. However, banks and Insurance companies are not allowed to adopt Ind AS voluntarily.

Key Considerations

  • Audited stand-alone financial statements as on 31 March to be considered for the calculation of net worth.
  • Net worth does not include revaluation reserves, write back of depreciation and amalgamation reserve
  • Once Ind AS is followed, it shall be followed for all subsequent years.
We, FINPRO consulting, provide quality consulting and training services who belong to accounts and finance background. Our 108 hours of recorded video lectures on IFRS  can help you to upgrade your IFRS / Ind AS knowledge. Candidates undergoing video lectures can also appear for the Diploma in IFRS (DipIFR) examination accredited by the Association of Chartered Certified Accountants (ACCA), UK. Further, we organize live-online training sessions on weekends for those who are preparing for DipIFR Examination.

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