With India deciding to converge with IFRS and not Adopt IFRS, Ind-AS is certainly the way forward for Indian Companies.
In simple terms, Convergence with IFRS means that India would not be applying the IFRS as issued by the International Body but would try to get its own accounting standards in snyc with the International Financial Reporting Standards. And these synced Indian Accounting Standards are popularly referred to as ‘Ind-AS’.
Recommended Read: Difference between IFRS Conversion and IFRS Adoption
But initially all the Ind-AS won’t be completely synchronised with the IFRS as there still exist some major differences in the Indian Economy as compared to the world economy. The Indian Economy is in developing stage as compared to the other developed economies and therefore, certain differences arise in Accounting Procedures as well.
Notified Ind-AS
On 25th February 2011, the Ministry of Corporate Affairs notified 35 Accounting Standards that have been synced with IFRS which are now available for download from
http://www.mca.gov.in/Ministry/accounting_standards.html
Although in the longer run, India intents to converge all its Ind-AS with IFRS, in the short run there are some significant differences between Ind-AS and IFRS, a few important ones being highlighted in this article.
Differences between Ind AS and IFRS
A Summary of the basic differences between Ind-AS and IFRS is presented below: -
1. Presentation of Financial Statements
Ind AS 1 deals with Presentation of Financial Statements and allows only the Single Statement approach.
In comparison, IAS 1 provides an option either to follow either the Single Statement Approach or follow the Two Statement Approach
Under the Single Statement Approach all items of Income & Expenses shall be recognised in the Statement of Comprehensive Income whereas the Two Statement Approach requires two statements to be prepared, one displaying the components of Profit & Loss and the other displaying the components of Other Incomes.
2. Treatment of Foreign Exchange Loss
Ind-AS 21 deals with Treatment of Foreign Exchange Losses and provides an option to recognise unrealised exchange differences arising on translation of long term monetary assets and liabilities either in Equity or in Profit & Loss A/c. If recognised in Equity, the amount so accumulated shall be transferred to Profit & Loss A/c over the period of maturity of such long term monetary items in an appropriate manner.
In comparison, IAS 21 says that unrealised exchange difference arising on long term monetary assets and liabilities shall be recognised immediately as Profit or Loss.
3. Classification of Expenses
Ind AS 1 deals with Presentation of Financial Statements and states that entities should present an analysis of the expenses recognised in the profit or loss using a classification based only on the nature of expense.
In comparison, IAS 1 says that entities can present an analysis of expenses recognised in Profit & Loss using either nature, or functional classification, whichever provides information that is reliable and more relevant.
4. Treatment of Interest and Dividends
Ind AS 7 deals with Statement of Cash Flows and states that Interest and Dividend paid is classified as Financing Cash Flows and the Interest and Dividend received is classified as Investing Cash Flows.
In comparison, IAS 7 states that Interest & Dividend paid and received shall be disclosed separately and each shall be classified in a consistent manner from period to period as Operating Cash Flows, Investing Cash Flows or Financing Cash Flows
5. Treatment of Construction Contracts
Ind AS 11 deals with Construction Contracts and states that Revenue shall be recognised on Percent of Completion Method without further evaluation.
In comparison, IAS 11 states that Revenue shall be recognised on the Completion of Contracts except where the contract meets the specified criteria.
6. Treatment of Government Grants
Ind AS 20 deals with Accounting for Govt. Grants and states that Non- Monetary Grants shall be recognised only at their Fair Value.
In comparison, IAS 20 states that Non- Monetary Grants can be recognised either at Fair Value or at their Nominal Value.
7. Treatment of Investment Property
Ind AS 40 deals with Investment Property and states that Investment Properties shall be measured using only the Cost Model.
In comparison, IAS 40 states that Investment Properties can be measured using either the Cost Model or the Fair Value Model.
8. Disclosure of Earnings per share
Ind AS 33 deals with Earnings per share and requires all EPS related information to be disclosed both in the Consolidated Financial Statements and separate Financial Statements.
In comparison, IAS 33 provides that when an entity presents both Consolidated Financial Statements as well as separate financial statements, it may give EPS related information in Consolidated Financial Statements only.
This is a Guest Post by CA Karan Batra who can be contacted at cakaranbatra@gmail.com.
If you also want to share your knowledge and views on any Topic, you can send them to us at admin@charteredclub.com
{ 28 comments }
Very well written article
Thankyou Bhavnoor
Thanks for the article!! It is a good revision for us since we have lectures going on Indian GAAP, IFRS & IAS/Ind AS these days in the class !!
Thankyou Nikita. I hope you are able to correlate the same as taught in the class.
And if I missed out on anything, please feel free to share it with us.
very well said sir,
thanks so much for d information….
Thankyou for your kind words Shyam
Thanks for the article, sir.
Your Welcome Varun
Thanx 4 d article.
your welcome Tanvi
Thank you sir for this article. It was really beneficial for me as i had to give a presentation on IND AS and it helped me in correlating it with IFRS and understand the topic in a better way.
Thankyou Subha
I hope this article was able to help you in giving your presentation on IND-AS
When will India adopt IND-AS ?
I heard they were supposed to be adopting IND-AS from 1st April 2011 ??
@ Sneha
MCA had postponed the implementation of IND-AS in India from 1st April 2011 to a future date.
This future date of implementation has till now not been announced by the MCA
India will benefit a lot from the implementation of IFRS. Dont know why India is delaying IFRS
Sir,
I have to present a paper on difference b/w “IND AS and Existing AS” in the CA Students conference on DEC 1st. So please give your views and ideas on the subject.
Thank you.
Sir,
Please let me know the applicability of IND AS, as when the same will be applicable to Indian Companies.
MCA has till date not announced the date for the implementation of IFRS (Ind-AS) for Indian Companies
simple and easy to understand.. Thanks
Dear Karan,
will indian Companies follow Ind-AS ( Desi Version) or IFRS ? I have seen on the sites of All BIG 4′s that both have so many differences. But , my next question is If an Indian Company follow Ind- AS not IFRS will there be any non compliance. Because we have read that from 01.04.2011 IFRS shall be mandatory , so from where these desi version came and if now they are present so what do we follow IFRS OR DESI IND-AS. Kindly clarify and oblige.
@Bhaskar
India is not adopting IFRS in its original form but would be Converging with IFRS rather than adopting IFRS
India never said that they would be adopting IFRS but always said that whenever IFRS becomes applicable in India, it would be converging with IFRS through the Ind-AS.
These Ind-AS are also hosted on the website of ICAI as well as on the websites of the Big 4 and India would be implementing these Ind-AS whenever they become applicable in India
Thanks for quick reply. I appreciate. Yes India is converging not adopting , now its clarified. But I have seen , all BIG4s are focussing on differences. Suppose we have our own IND-AS ( Desi version of IFRS) then why are we bothered if we differ from IFRS. I dont think the differences are only for academic purpose. Could you please enlighten on this issue. I really like your way of explaining.
The differences are being highlighted as it facilitates in comparison of the manner in which the Accounts are being prepared in India and the way they are prepared in other Countries.
This is of help to foreign investors who can compare the Profitability of one company in a country with a company in some other country
wow !! thanks sir !! Simple words only make big differences. !! convinced.
@ Karan
Excellent article. Any idea when ICAI will be introducing for the final exam, considering the date of implementation of Ind AS.>??
@ Anoop
Ind-AS would become applicable for CA Exams only once the same is adopted and implemented by MCA in India and MCA has not announced the date of implementation of Ind AS in India.
From when IND AS will be appllicable?
Has MCA notified the date?
@Vikas Jindal
No, the date of applicability has not been announced by MCA