Difference between IFRS and IND AS (2024)

FAQs

Difference between IFRS and IND AS? ›

The International Financial Reporting Standards (IFRS) are globally acknowledged accounting standards. The Indian Accounting Standards (IND AS) are the Indian adaptation of the IFRS.

The key difference between IAS and IFRS is that IAS is the earlier version of the accounting standards, while IFRS is a more up-to-date and widely used version worldwide. IFRS provides more detailed requirements for financial reporting and covers a broader range of accounting issues than IAS.

IFRS 1 defines previous GAAP as the basis of accounting that a first-time adopter used immediately before adopting IFRS. Carve Out: - Ind AS 101 defines previous GAAP as the basis of accounting that a first-time adopter used immediately before adopting Ind ASs for its reporting requirements in India.

The IFRS governs how companies around the world prepare their financial statements. Unlike the GAAP, the IFRS does not dictate exactly how the financial statements should be prepared but only provides guidelines that harmonize the standards and make the accounting process uniform across the world.

The difference between GAAP and IND AS is that GAAP is used in the United States of America and Ind AS is used specifically in India. Also read: Difference Between Cash Basis and Accrual Basis of Accounting. Accrual Basis of Accounting.

The IFRS for SMEs and full IFRS are separate and distinct frameworks. Unlike Indian GAAP and IFRS, there is no exemption or relaxation in complying with US GAAP requirements except certain relaxations for non-public companies.

Rules-based: IFRS is more principles-based than IAS, which means that it provides more general principles and concepts rather than specific rules. IFRS allows more flexibility in how companies report their financial information, while IAS provides more prescriptive guidance.

IND AS 116 is in substance fully convergent with IFRS 16 and contains similar principles and requirements for lease accounting and reporting by a lessee. This new model is supposed to be based on the principle of substance over form.

As per paragraph of 15 of IFRS 15, an amount of consideration, among other things, can vary because of penalties. No major differences between Ind AS -115and IFRS-15. Therefore, the following paragraphs relate to both Ind AS -115and IFRS-15.

It makes it much easier for them to study and compare the financial statements of foreign companies. Since the financial statements are made using the same set of standards it is also easier for the investors to understand and analyze them. With globally accepted standards the industry can also surge ahead.

Does India follow GAAP or IFRS? ›

India follows an accounting standard that is based on IFRS, it is known as Ind AS and is in use since the accounting period of 2016-17. The latest revision happened in June 2021.

GAAP tends to be more rules-based, while IFRS tends to be more principles-based. Under GAAP, companies may have industry-specific rules and guidelines to follow, while IFRS has principles that require judgment and interpretation to determine how they are to be applied in a given situation.

The two main distinctions are: Enforcement. GAAP is rule-based, meaning publicly traded US companies are lawfully required to follow its directives. On the other hand, IFRS is standard-based, meaning no one is required to follow its guideline—though it's recommended.

Who is required to comply with Ind AS? All companies listed on stock exchanges in India or outside India with a net worth of Rs. 250 crore or more and unlisted companies with a net worth of Rs. 500 crore or more are required to comply with Ind AS.

Ind As facilitates global listing. Ind As also facilitates global comparability of financial statements. Ind AS improves the investor's ability to compare investments globally. Thus, global investment becomes easier, and capital market stakeholders benefit.

International Accounting Standards (IAS) are a set of rules for financial statements that were replaced in 2001 by International Financial Reporting Standards (IFRS) and have subsequently been adopted by most major financial markets around the world.

Changes in companies' reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems. IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1 unchanged. IFRS 18 is the culmination of the IASB's Primary Financial Statements project.

IFRS 16 was introduced to address the limitations and shortcomings of the previous lease accounting standard, IAS 17. The primary reasons for the need of IFRS 16 were: Off-Balance Sheet Financing Concerns: Under IAS 17, operating leases were kept off the balance sheet.

The main difference relates to the treatment of residual value guarantees provided by a lessee to a lessor. This is because IFRS 16 requires that the company recognise only amounts expected to be payable under residual value guarantees, rather than the maximum amount guaranteed as required by IAS 17.