Select Page

India has been progressively converging its accounting standards with International Financial Reporting Standards (IFRS) to enhance transparency, comparability, and credibility of financial reporting. The process has been ongoing, and while Indian Accounting Standards (Ind AS) are based on IFRS, there are some differences due to specific regulatory and economic considerations. Below is a comparison highlighting the matching of Indian Accounting Standards with International Accounting Standards:

  1. Similarities:

    a. Framework: Both Ind AS and IFRS are based on a common conceptual framework, providing the foundation for developing accounting standards.

    b. Fair Value Measurement: Both frameworks emphasize fair value measurement for certain financial instruments, investments, and tangible assets.

    c. Consolidation: Ind AS and IFRS follow similar principles for consolidation of financial statements, including control, significant influence, and joint control criteria.

    d. Revenue Recognition: Both frameworks have converged towards a common revenue recognition standard (Ind AS 115 and IFRS 15), emphasizing the recognition of revenue when control of goods or services transfers to the customer.

    e. Leases: Ind AS 116 and IFRS 16 have converged standards for lease accounting, requiring lessees to recognize most leases on their balance sheets.

    f. Financial Instruments: Both frameworks have similar approaches to the classification, measurement, and disclosure requirements for financial instruments.

  2. Differences:

    a. Effective Dates: While IFRS is implemented globally, Ind AS has been adopted gradually in India. Therefore, there might be differences in the effective dates of certain standards.

    b. Carve-outs: India has made some modifications or carve-outs from IFRS to suit local requirements. For example, Ind AS 17 (Leases) differed from IFRS 16 until its convergence.

    c. Industry-specific Standards: Some industry-specific requirements in India may differ from IFRS due to unique regulatory or economic factors.

    d. Government Accounting: India has specific accounting standards for government entities, which may differ from IFRS due to the distinct nature of public sector operations.

    e. Taxation: Indian tax laws and accounting standards may not always align perfectly, leading to differences in certain areas such as depreciation methods and deferred tax accounting.

  3. Regulatory Oversight: While IFRS is governed by the International Accounting Standards Board (IASB), Ind AS is regulated by the Accounting Standards Board (ASB) under the Institute of Chartered Accountants of India (ICAI).

Overall, while India is moving towards convergence with IFRS, there are still some divergences reflecting local regulatory, economic, and cultural factors. However, the intention is to align more closely with international standards to enhance transparency and comparability in financial reporting