IAS 20 gives an option to present the grants related to assets, including non-monetary grants at fair value in the balance sheet either by setting up the grant as deferred income or by deducting the grant in arriving at the carrying amount of the asset. It is felt that recognition of such gains in profit or loss would result into recognition of unrealised gains as the value of net assets is determined on the basis of fair value of net assets acquired, 7. (v)        Other countries such as South Korea have also been raising these issues. Ind AS 103 requires the same to be recognised in other comprehensive income and accumulated in equity as capital reserve, unless there is no clear evidence for the underlying reason for classification of the business combination as a bargain purchase, in which case, it shall be recognised directly in equity as capital reserve. 2 A sentence has been added in paragraph 9 of Ind AS 27, Consolidated and Separate Financial Statements requiring that for companies the form of consolidated financial statements as given in Appendix C to this standard shall be applied to the extent circumstances admit. Ind AS 101 provides an option to provide a comparative period financial statements on memorandum basis. IFRIC 12 and SIC 29, Service Concession Arrangements and Service Concession Arrangements: Disclosures, respectively, which are included as Appendices A and B to Ind AS 11, Construction Contracts, respectively, would not be notified along with the other standards and their application has been deferred. adopted by the International Accounting Standards Board. This infographic displays the key differences between the International Financial Reporting Standards (IFRS) and Indian Accounting Standards (Ind-AS). This move will not be easy considering that Ind AS is rather different from the current Indian GAAP standards. Since the investor has significant influence and not control over the associate, it may not be able to influence the associate to change its accounting policies. Since IFRS 4 has been replaced by IFRS 17, there was an urgent need to clarify which standard the insurance sector in India would need to apply while transitioning to Ind AS. Ind AS 1 does not permit it. IAS 40 permits both cost model and fair value model (except in some situations) for measurement of investment properties after initial recognition. 1 Paragraphs 8, 10 and 42 have been deleted and paragraphs 9, 11, 39 and 43 have been modified as the applicability or exemptions to the Indian Accounting Standards is governed by the Companies Act and the Rules made thereunder. Ind AS 21, The Effects of Changes in Foreign Exchange Rates. Currently, IFRS consists of 38 standards and 26 interpretations, while the MCA has placed only 35 Ind AS (inclusive of 24 2. (v) Financial instruments existing on transition date Carve out. Topic-8 Difference Between Indian Accounting Standards and Ifrs - Free download as Powerpoint Presentation (.ppt / .pptx), PDF File (.pdf), Text File (.txt) or view presentation slides online. In effect, change as mandated by Ind AS 109 lies in widening the range of situations to which one can apply hedge accounting. existing accounting standards … Ind AS 32, Financial Instruments: Presentation Carve out. Ind ASs refers to the accounting standards as specified in the Annexure to “24A Disclosure of details of particular transactions with individual related parties would frequently be too voluminous to be easily understood. Ind AS 1 allows only the single statement approach. AS 18 is based on IAS 24 (reformatted 1994) and following are the major differences between the two. The standard does not prescribe any standardization. 6. A company has to disclose a note that its financial statements comply with IFRS. Ind AS 40 permits only the cost model. IFRS 1 provide clear instructions about how to adopt IFRS for first time. Indian Accounting Standard on Agriculture (Corresponding to IAS 41). In Ind AS 24, disclosures which conflict with confidentiality requirements of statute/regulations are not required to be made since Accounting Standards cannot override legal/regulatory requirements. 3)            An example to clarify paragraphs 33 and 37. 2. Ind AS 1 requires the Statement of Changes in Equity to be shown as a part of the balance sheet. Write CSS OR LESS and hit save. Accounting for Gevernment Grants and Disclosure of Government Assistance, The Effects of Changes in Foreign Exchange Rates, Investments in Associates and Joint Ventures, Accounting for Investments in Associates in Consolidated Financial Statements, Financial reporting in Hyperinflationery Economies, Provisions, Contingent Liabilities and Contingent Assets. DIFFERENCES BETWEEN IFRSs AND Ind ASThis note is issued by the Institute of Chartered Accountants of India (ICAI) to bring out the differences between the IFRSs1 as applicable on 1st April, 2011 and the corresponding Indian Accounting Standards (Ind ASs) placed by the Ministry of Corporate Affairs (MCA), Government of India, on its website after recommendation of the same by the National Advisory Committee on Accounting Standards (NACAS) and the ICAI. 4)                  The date of change of functional currency should also be disclosed in paragraph 57. (v) Considering the high volatility of prices for the end products, the fair value adopted as cost as per IAS 41, may result in very significant impact on the profitability of the companies. Conceptual differences. Posted On April 2015. Ind AS 23 provides guidance in this regard. This would facilitate smooth convergence with IFRS. (i)          IFRIC 15, would have required the real estate developers to recognize the revenue in their financial statements based on the completion method i.e., only in the last year of the completion of the project. This publication (pdf, 12.7MB) summarises the significant differences between Ind AS and IFRS as at the date of publication, and provides an indication of which GAAP differences are avoidable if the preparer so wishes. A footnote has been added in paragraph 1 to Ind AS 18, Revenue, that for rate regulated entities, this standard shall stand modified, where and to the extent the recognition and measurement of revenue of such entities is affected by recognition and measurement of regulatory assets/liabilities as per the Guidance Note on the subject being issued by the Institute of Chartered Accountants of India. © Copyright © 2017 Education. India, as a step closer to convergence with IFRS, has adopted IND-AS. Ind AS 1 is changed to remove alternatives by giving one terminology to be used by all entities. Language of paragraph 8 has been changed to clarify more precisely that ‘servicing equipment’ also qualifies as property, plant and equipment when an entity expects to use them during more than one period. India will soon be converging with to IFRS and Indian IFRS standards, which is known as Ind AS. The IRDAI has, with the deferment of Ind AS road map for insurance companies, paid heed to the requests of a number of insurance companies and tried to avoid two major changes in accounting framework for the insurance … In other words, if the associate’s accounting policies are different from those of the investor, the investor should change the financial statements of the associate by using same accounting policies. New standards are developed in order to evade drawbacks of old ones. An appendix summarises the differences between Ind AS 103 and IFRS 10 Consolidated Financial Statements. In the recent financial crisis in USA, it was noted that some banks booked gains while they were incurring losses due to the crisis. When comparing IFRS and Indian GAAP, there are many … Watch out this space for more features that distinguishes IFRS from the existing accounting standards. The actuarial gains recognised in other comprehensive income should be recognised immediately in retained earnings and should not be reclassified to profit or loss in a subsequent period. Ind AS 101, requires an entity to provide comparatives as per the existing notified Accounting Standards. IFRIC 15 has not been included in Ind AS 18, Revenue. Ind AS 20 requires presentation of such grants in balance sheet only by setting up the grant as deferred income. (ii)        Unlike currencies of many advanced countries, rupee is not fully convertible. 1. Ind AS 101 provides that the financial instruments carried at amortised cost should be measured in accordance with Ind AS 39 from the date of recognition of financial instruments unless it is impracticable (as defined in Ind AS 8) for an entity to apply retrospectively the effective interest method or the impairment requirements of Ind AS 39. As on date 123 countries across the globe have converged with IFRS, India is soon to join the bandwagon. Join our newsletter to stay updated on Taxation and Corporate Law. Related Party Disclosures. IFRIC 4 Determining Whether an Arrangement contains a Lease, which is included as Appendix C to Ind AS 17, Leases would not be notified alongwith the other standards and its application has been deferred. 4 IAS 1 permits the periodicity, for example, of 52 weeks for preparation of financial statements. Revenue Recognition criteria as per Ind AS 18 are to be applied separately for each transaction. Apart from this, another reason can be a situation, e.g., where an entity is an associate of two investors and difference between the reporting dates of the associate and the investors is more than three months and the reporting dates of the two investors are also different. These borrowings are denominated in foreign currencies unlike developed countries where borrowings are denominated in local currencies. Accordingly, items of a similar nature may be disclosed in aggregate by type of related party. Ind AS 1 does not include the same because various enactments have prescribed formats, e.g., Schedule VI to the Companies Act, 1956. We use cookies to ensure that we give you the best experience on our website. 1 IAS 33 provides that when an entity presents both consolidated financial statements and separate financial statements, it may give EPS related information in consolidated financial statements only, whereas, the Ind AS 33 requires EPS related information to be disclosed both in consolidated financial statements and separate financial statements. The change makes it mandatory for Indian companies to consider the financial statements prepared in accordance with existing notified Indian accounting standards as was applicable to them as under Companies (Accounting Standards) Rule, 2006 as previous GAAP when it transitions to Ind AS as the law prevailing in India does not recognise the financial statements prepared in accordance with Accounting Standards other than those prescribed under the Companies Act. Foreign Exchange Rates, as Appendix B: 1)             An example to clarify the provisions of paragraph 14. CTRL + SPACE for auto-complete. If you continue to use this site we will assume that you are happy with it. It also requires that an entity that discloses earnings per share shall calculate and disclose earnings per share in accordance with this Standard. IAS 28 requires that difference between the reporting period of an associate and that of the investor should not be more than three months, in any case. Ind AS 29, Financial Reporting in Hyperinflationary Economies. Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors. Such differences may result into certain regulatory assets and regulatory liabilities which are presently not recognised as per the IFRS. 1. As IAS and IFRS are standards in the accounting practice that one adheres to in financial reporting, it is important to know the difference between IAS and IFRS. Taxonomy 1. Where the entities do not exercise this option and, therefore, do not provide comparatives, they need not provide reconciliation for total comprehensive income, cash flow statement and closing equity in the first year of transition but are expected to disclose significant differences pertaining to total comprehensive income. Section IV contains a comparative chart of IFRSs and corresponding Ind ASs indicating, inter alia, IFRSs in respect of which no corresponding Ind AS has been formulated and reasons therefor. MCA received feedback regarding the adverse consequences which may ensue to the Indian companies in the event of immediate adoption of the Appendix C to Ind AS 17, corresponding to IFRIC 4. COMPARISON OF IFRS WITH INDIA ACCOUNTING STANDARDS In an effort to converge with International Financial Reporting Standards (IFRS), the Ministry of Corporate Affair (MCA), Government of India released 35 India accounting standards (known as “Ind AS”) on February 25, 2011, without announcing the date on which these would be applica-ble. Paragraph 24A (reproduced below) has been included in the Ind AS 24. Ind AS 39, Financial Instruments: Recognition and Measurement, IAS 39 requires all changes in fair values in case of financial liabilities designated at fair value through Profit and Loss at initial recognition shall be recognised in profit or loss. It is provided that, in addition to aforesaid comparatives, an entity may also provide comparatives as per Ind AS on a memorandum basis. An exception has been included to the definition of ‘financial liability’ in paragraph 11 (b) (ii), Ind AS 32 to consider the equity conversion option embedded in a convertible bond denominated in foreign currency to acquire a fixed number of entity’s own equity instruments as an equity instrument if the exercise price is fixed in any currency. 3. Now India will have two sets of accounting standards viz. (i)             There is difficulty in identifying the attributes of biological assets, the cost of fair valuation, and high volatility of significant qualitative factors (not within the control of the entity) leads to greater subjectivity in estimating fair value. So in this post we brings to you AS vs IND AS vs IFRS . It will minimise the cost of convergence. Ind AS 8 has been amended to provide that in absence of specific Ind AS on the subject, management may also first consider the most recent pronouncements of International Accounting Standards Board and in absence thereof those of the other standard-setting bodies that use a similar conceptual framework to develop accounting standards, other accounting literature and accepted industry practices. Ind AS 106, Exploration for and Evaluation of Mineral Resources. (b) the consolidated financial statements of a group with a parent: (ii)            that files, or is in the process of filing, its financial statements with a Securities Regulator or other regulatory organisation for the purpose of issuing ordinary shares in a public market. If you continue browsing the site, you agree to the use of cookies on this website. Hence, this Ind AS may not be notified immediately. IAS stands for International Accounting Standards, while IFRS refers to International Financial Reporting Standards. IAS standards were issued by the IASC, while the IFRS are issued by the IASB, which succeeded the IASC. 2           The following examples have been included in Ind AS 21, The Effects of Changes in IFRS 1 requires specific disclosures if the entity provides non-IFRS comparative information and historical summaries. Ind AS 101 does not provide the same. 2. AS vs IND AS vs IFRS So most of you are confused while remembering IND AS along with … In this video, we'll examine the main differences between IFRS vs Indian GAAP. Ind AS 27, Consolidated and Separate Financial Statements. It is this date which is the starting point for IFRS and it is on this date the cumulative impact of transition is recorded based on assessment of conditions at that date by applying the standards retrospectively except to the extent specifically provided in this standard as optional exemptions and mandatory exceptions. 5 IAS 1 requires an entity to present an analysis of expenses recognised in profit or loss using a classification based on either their nature or their function within the equity. Differences between Indian Accounting Standards (Ind-ASs) and corresponding IFRSs are given in Appendix 1 at the end of each Indian Accounting Standard. IAS 19 permits various options for treatment of actuarial gains and losses for post-employment defined benefit plans whereas Ind AS 19 requires recognition of the same in other comprehensive income, both for post-employment defined benefit plans and other long-term employment benefit plans. Similarly, while Singapore has decided to issue IFRIC 15, it has provided specific guidance in the context of legal situations prevailing in that country. This is IFRS that are adopted specifically for use for Indian standards and companies. IFRS 3 excludes from its scope business combinations of entities under common control. Section III contains ‘Other major changes in Indian Accounting Standards vis-à-vis IFRSs not resulting in carve outs’. The materials and information provided on this website are for reference purposes only. IAS 21 requires recognition of exchange differences arising on translation of monetary items from foreign currency to functional currency directly in profit or loss. India is trying to move to the Indian IFRS accounting standards popularly known as Ind AS. ICAI is developing a Guidance Note on the subject. This exemption would facilitate smooth convergence with IFRS. Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), IV. IFRS 1 defines previous GAAP as the basis of accounting that a first-time adopter used immediately before adopting IFRS. Exemption given as a consequence of optional treatment prescribed in Ind AS 21, The Effects of Changes in Foreign Exchange Rates, in context of exchange differences arising on account of certain long-term monetary assets or long-term monetary liabilities. Appendix C of Ind AS 103 gives guidance in this regard. Such entities feel that such assets and liabilities exist and, therefore, should be recognised in financial statements. This position is not appropriate in instruments such as FCCBs since the number of shares convertible on the exercise of the option remains fixed and the amount at which the option is to be exercised in terms of foreign currency is also fixed; merely the difference in the currency should not affect the nature of derivative, i.e., the option. IAS standards were published between 1973 and 2001, while IFRS standards were published from 2001 onwards. All Rights Reserved. 6 IAS 1 contains Implementation Guidance. IAS 24. 3. Ind AS 18. publication (pdf, 12.7MB) summarises the significant differences between Ind AS and IFRS as at the date of publication, and provides an indication of which GAAP differences are avoidable if the preparer so wishes. (vi)       It is not appropriate to recognise the exchange differences immediately which arise as a result of items which are to be paid/realized in foreign currency, after a long term nature. Nov 2020 onwards, which can’t be ignored, How a student can make best out of the articleship, Vivad Se Vishwas Scheme 2020- Salient Features, GST on supplying manpower to Hospitals & Dispensaries run by Government medical college, Extend due dates of Tax Audit Reports/ITR for A.Y. For instance, for companies preparing their financial statements in accordance with the existing Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 shall consider those financial statements as previous GAAP financial statements. IFRS 1 requires reconciliations for opening equity, total comprehensive income, cash flow statement and closing equity for the comparative period to explain the transition to IFRS from previous GAAP. A. Carve-outs which are due to differences in application of accounting principles and practices and economic conditions prevailing in India. It is also felt that since Ind AS 101 would not be considered to be in existence for the comparative period, requiring comparatives to be prepared on the basis of Ind AS may not be legally defensible. On the basis of principles of the IAS 18, IFRIC 15 on Agreement for Construction of Real Estate, prescribes that construction of real estate should be treated as sale of goods and revenue should be recognised when the entity has transferred significant risks and rewards of ownership and has retained neither continuing managerial involvement nor effective control. 2)             An example to clarify impairment loss in Paragraph 25. They comprise the International Financial Reporting Standards, International Accounting Standards, and Interpretations issued by the IFRS Interpretations Committee or the former Standing Interpretations Committee. Paragraph 3 of Ind AS 101 specifies that an entity’s first Ind AS financial statements are the first annual financial statements in which the entity adopts Ind ASs in accordance with Ind ASs notified under the Companies Act, 1956 whereas IFRS 1 provides various examples of first IFRS financial statements. < BACK TO LIBRARY. Since the investor does not have control over the associate, it may not be able to influence the associate to change its accounting period if it does not fall within 3 months. (vi) Definition of previous GAAP under Ind AS 101 First-time Adoption of Indian Accounting Standards. • included Ind AS 115 (equivalent of IFRS 115) Revenue from contracts with customer • IFRS 15 is Joint project of FASB and IASB • Representationfrom stakeholders as to impact of this and time required • IASB confirmed deferralof IFRS 15 • After deferral, MCA also deferredInd AS 115 • Post deferment, MCA notified • Ind AS 11Ind AS 18 Ind AS 101 First-time Adoption of Indian Accounting Standards. MCA received feedback regarding the adverse consequences which may ensue to the Indian companies in the event of immediate adoption of the IFRIC 12. Required fields are marked *, Notice: It seems you have Javascript disabled in your Browser. (ii)            The quoted market price for bearer biological assets (e.g. long-term assets that produce each year such as tea, coffee, rubber and palm oil trees) is not easily available, since these are not traded in the open market. In such circumstances, the standard does not serve any useful purpose and may create a wrong impression in the mind of the stakeholders that the entity concerned has complied with a strict standard when in fact, the company is free to apply any accounting treatment it wants. Accordingly, the comparatives, i.e., the previous year figures are also presented in the first financial statements prepared under IFRS on the basis of IFRS. 3 In the definition of the ‘close members of the family of a person’, relatives as specified under the meaning of ‘relative’ under the Companies Act, 1956, has been included. Ind AS 40 Investment Property IAS 40 Investment Property No standard No near Final Draft IAS 41 Agriculture No standard Ind AS 101 First Time Adoption of Indian Accounting Standards IFRS 1 First Time Adoption of International Financial Reporting Standards No standard Ind AS 102 Share Based Payment IFRS 2 Share Based Payment No standard Ind AS 103 Business Combination IFRS 3 … (i)      There is significant fluctuation in the value of US dollar vis-à-vis rupee. Ind AS 101, First-time Adoption of Indian Accounting Standards, (i) Presentation of comparatives in the First-time Adoption of Indian Accounting Standards (Ind AS) 101 (corresponding to IFRS 1). This presentation takes one through the differences between Indian GAAP (old) vs IND AS (based on IFRS).All major differences … In that case, the profit and loss account of the developers will not truly reflect the performance of the business, as during the years the real estate project continues, no revenue will be recognised. (iv)       Fair value of biological assets may not be relevant because most plantations are rarely sold. IFRS are issued by the International Accounting Standards Board (IASB). IFRS 9 which will replace IAS 39 requires these to be recognised in ‘other comprehensive income’. Indian GAAP, IFRS and Ind AS - A Comparison Download the insights The summary does not attempt to capture all of the differences that exist or that may be material to a particular entity's financial statements or all the provisions of Schedule III to the Companies Act, 2013 nor does it include differences relating to pronouncements by other regulators such as RBI, Income tax authorities, etc. 3 IAS 1 gives the option to individual entities to follow different terminology for the titles of financial statements. 5. All Rights Reserved. This may even be counter productive from a regulatory point of view by giving a false sense of correctness. Hence, purchases or sales of goods are not aggregated with purchases or sales of fixed assets. In this situation, Ind AS 21 requires the accumulated exchange differences to be amortised to profit or loss in an appropriate manner. This exception is not provided in IAS 32. IFRS: Indian GAAP: The full form of IFRS is International Financial Reporting Standards. Summary – IAS 17 vs IFRS 16. IFRS AND IND AS Preface India, one of the fastest growing global economies is on the verge of converging with International Financial Reporting Standards (IFRS). So most of you are confused while remembering IND AS along with corresponding Accounting Standard. Thus, the option to present such grants by deduction of the grant in arriving at the carrying amount of the asset is not available under Ind AS 20. This would facilitate smooth convergence with IFRS, (iv) Foreign currency gains/losses on translation of long term monetary items Carve out. Therefore, it has also been deferred. 17. Making appropriate estimates of future price and costs levels are key factors for a reliable fair value measurement of standing forests. The above have been deleted in the Ind AS as the applicability or exemptions to the Indian Accounting Standards is governed by the Companies Act and the Rules made there under. So to bridge the gap , Company law board has came with a solution named as IND AS which is nothing bt IFRS..These standards have been made applicable to Indian companies through a road map ie. Adopted by more than 110+ countries. 1. Like ASC 606 and IFRS 15, India too has accounting standards that provide guidelines for standardized revenue recognition to simplify taxation in India’s burgeoning economy, and this standard is known as the Ind AS 18. The difference between IAS 17 and IFRS 16 provides a sound example of how accounting treatment for various inputs and outputs in a business is subjected to change over time when new standards become available making the old ones of limited use. MCA is of view that the standard is open-ended offering freedom to companies to follow virtually any policy they like. In order to submit a comment to this post, please write this code along with your comment: 6e07f8b7384497e660d2d81e59557a94. The phrase ‘unless it is impracticable’ has been added in the relevant requirement i.e., paragraph 25 of Ind AS 28. Ind AS 29 requires an additional disclosure regarding the duration of the hyperinflationary situation existing in the economy. Disclosed in aggregate by type of related party income ’ ( I ) there no! Had earlier taken up a project on this subject which has been added in Ind AS 21, option... 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