Indian Accounting Standards (Ind AS)

Indian Accounting Standards (Ind AS)

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Package inclusions:
  • Procedure for implementation of Indian Accounting Standards
  • Different Types of such as IRFS and Ind AS
  • Criteria for adopting Indian Accounting Standards
  • Impact of Adoption
Indian Accounting Standards (Ind AS)

Overview of Indian Accounting Standards

Accounting is considered the language of a business as it communicates the financial results of the business to its stakeholders by financial statements. An unregulated financial process can misrepresent the company's reputation, and that is when the Accounting Standards become important.

The Indian Accounting Standards are, commonly known as Ind AS,  which are the minimum standards that need to be followed by a company to maintain the books of Accounts or the disclosures that need to be provided while preparing the financial Statements. They deal with the issues of recognition,  presentation and maintenance of transactions and events and disclosure requirements. These standards are structured in a similar way of the International Financial Reporting Standards (IFRS ) and were recommended to the Ministry of Corporate Affairs(MCA) by the National Financial Reporting Authority ( NFRA).

The companies in India adopt these Accounting Standards under the supervision of Accounting Standards Board which is an autonomous body constituted in the year 1977 by the Institute of Chartered Accountants of India consisting of academicians’ government depart and other professional bodies.

Bodies that Govern Applicability of Ind As (Indian Accounting Standards)

  • The following institutions govern the applicability of Ind As- 
  • Institute of Chartered Accountants of India
  • Securities Exchange Board of India 
  • Confederation of Indian Industry (CII), 
  • Federation of Indian Chambers of Commerce and Industry (FICCI) 
  • Associated Chambers of Commerce and Industry of India (ASSOCHAM)
  • Insurance Regulatory Authority of India 
  • National Advisory Committee on Accounting Standards (NACAS) 

 Objectives of The Indian Accounting Standards

The Indian Accounting Standards have the following Objectives –

  • Ensure the adoption of the Accounting Standards by the companies in India in order to maintain the books of accounts as per the best practices which are recognized internationally.
  • Have a unified framework for the preparation of books of accounts and ensure transparency in the financial process.
  • Enhance harmonization due to the company’s adherence to the global standards
  • Ensure that the Accounting Standards are being complied with across the globe and increase the global reach of the Indian companies/

Applicability of Ind As

The government of India and the Ministry of Corporate Affairs released a  notification related to the adoption and applicability of Indian Accounting Standards by all companies in India. This notification was brought through a legislative enactment Companies (Indian Accounting Standards (IND AS)) Rules 2015. As per the above notification, all companies which receive this notification would be required to adopt Ind As in a phased manner in the financial year 2016-17. Since the above enactment, there have been three amendments in the notification, which occurred in 2016, 2017 and 2018.

Benefits of Adopting Indian Accounting Standards

There are different forms of benefits to adopting Indian Accounting Standards:

  • Harmonization 

Adopting the Indian Accounting Standards can help in the harmonization of the company with the other countries due to the company s adherence to the global standards 

  • Expansion of  Business

The Indian Accounting Standards are recognised internationally. This can help the company expand their business internationally and set up an international base. 

  • World Wide Acceptance 

The Indian Accounting Standards ensure international acceptance amongst all institutions and governmental bodies.

  • Compliance 

Adopting these standards can help in the company's effective compliance. 

Other Information Section

Phases of Adoption of Indian Accounting Standards

The Adoption of the Indian Accounting Standards was divided into phases per the notification of the Ministry of Corporate Affairs; the division of the phases was based on the Net Worth and listing status of the company.

The Phases of Adoption of the Indian Accounting Standards are enumerated below- 

Phase 1

The first phase of Indian Accounting Standards was mandatorily applicable for the companies in India w.e.f 1st April 2016 only if

  • The company is listed or unlisted
  • Have a Net Worth of more than 500 Cr.

The calculation of the net worth is on the basis of the financial statements of the previous 3 FY i.e. 31.03. 14 – 31.03.16.

Phase 2

This phase of Indian Accounting Standards was mandatorily applicable for the companies in India w.e.f 1st April 2017 only if

  • The company is listed or in the process of being listed
  • Have a Net Worth of more than 250 Cr. but less than 500 Cr. for the FY 2014-2016

The net worth is calculated on the basis of the financial statements of the previous 4 FY i.e. 31.03. 14 – 31.03.17

Phase 3

This phase is mandatorily applicable for all the banks, NBFC and Insurance companies in India w.e.f 1st April 2018 only if

  • The company is listed or in the process of being listed
  • Have a Net Worth of more than 500 Cr. Wef 1st April 2018

There are separate Ind AS for Banking and Insurance Companies with effect from 1st April 2018 as notified by IRDA, along with separate Core investment companies, stockbrokers, venture capitalists, etc. are all included in NBFCS.

The calculation of the net worth is based on the financial statements of the previous 3 FY i.e. 31.03. 16 – 31.03.18

Phase 4

This phase is mandatorily applicable for all NBFCs in India w.e.f 

1st April 2019 only if

The company have a Net Worth of more than 250 Cr.but less than 500 Cr.

The company can follow the Indian Accounting Standards either voluntarily or mandatorily. However, if the company follows Ind AS on a mandatory basis, it can not revert back from the same.

Applicability of Indian Accounting Standards subsidiary or associate companies

If an Indian company adopts the accounting standard, it will apply to all subsidiaries, sister companies, holding companies and associate companies. No form of individual qualification would be considered for these forms of companies. Hence 

The applicability of IND AS would be automatic. If a foreign company controls a company, then the accounting principles must be considered on a standalone basis. The implementation of IND AS would not be required for those companies.

Services provided under Indian Accounting Standard

  • Business advisory services related to specific Ind AS & IFRS applicability, i.e. Business merger, Consolidation, Financial Instruments, Hedge Accounting, Leases, and Revenue Recognition
  • Planning, implementation, and conversion of IND Accounting standards.
  • Facilitating conversion to the new IND AS standards.
  • Assisting in analyzing the difference between GAAP and Indian Accounting standards.
  • Assistance in deciding new policies and procedures must be implemented under the Indian Accounting Standards.
  • Assistance in executing the identified changes for meeting Ind Accounting standards
  • Training as required to the staff on Ind AS concepts and requirements
  • Assistance in the compilation of financial statements under the IND Accounting Standards.

List of Applicable Indian Accounting Standards

The following table provides a list of the major applicable Ind AS as on 01/02/2022

Ind AS 1

Prepration of Financial Statements

Ind AS 2

Inventories Accounting

Ind AS 7

Statement of Cash Flows

Ind AS 8

Accounting Policies , Changes in Accounting Estimates and Errors

Ind AS 10

Events and Reporting Period

Ind AS 12

Income Taxes

Ind AS 16

Property, Plant and Equipment

Ind AS 17

Leases

Ind AS 18

 Revenue

Ind AS 19

Employee benefits

Ind AS 20

Accounting for Government Grants and Disclosure of Government Assistance

Ind AS 21

The Effects of Changes in Foreign Exchange Rates

Ind AS 23

Borrowing Costs

Ind AS 24

Related Party Disclosures

Ind AS 27

Separate Financial Statements

Ind AS 28

Investments in Associates and Joint Ventures

Ind AS 29

Financial Reporting in Hyperinflationary Economies

Ind AS 32

Financial Instruments: Presentation

Ind AS 33

Earnings per Share

Ind AS 34

Interim Financial Reporting

Ind AS 36

Impairment of Assets

Ind AS 37

Provisions, Contingent Liabilities and Contingent Assets

Ind AS 38

Intangible Assets

Ind AS 40

Investment Property

Ind AS 41

Agriculture

Ind AS 101

First-time adoption of Ind AS

Ind AS 102

Share Based payments

Ind AS 103

Business Combination

Ind AS 104

Insurance Contracts

Ind AS 105

Non-Current Assets Held for Sale and Discontinued Operations

Ind AS 106

Exploration for and Evaluation of Mineral Resources

Ind AS 107

Financial Instruments: Disclosures

Ind AS 108

Operating Segments

Ind AS 109

Financial Instruments

Ind AS 110

Consolidated Financial Statements

Ind AS 111

Joint Arrangements

Ind AS 112

Disclosure of Interests in Other Entities

Ind AS 113

Fair Value Measurement

Ind AS 114

Regulatory Deferral Accounts

Ind AS 115

Revenue from Contracts with Customers

Enterslice Assistance Section

Indian Accounting Standards: Our Role 

  • Assistance in Adoption of Accounting Standards.
  • Providing proper assistance in analyzing the difference between Indian GAAP (Generally accepted accounting principles) and Ind As.
  • Assistance in the execution of identified changes for harmonizing to Ind AS.
  • Training the staff of the company on key Accounting standard concepts and prerequisites.
  • Assistance in the collection of financial statements.

Frequently Asked Questions

Indian Accounting Standards are referred to as Ind As. Such standards are required to be implemented by all companies in India.

IFRS relates to global accounting standards, which are developed and followed internationally. Indian accounting standards have been developed and followed in India.

The Ind As was developed under the supervision and vigilance of the Accounting Standards Board (ASB). The accounting standards board was developed as a regulatory authority and body in 1977.

A phased approach related to adoption and implementation means the approach which by means all companies have to comply with.

Such standards must be followed by NBFC, Insurance Companies, Listed Companies and SEBI-regulated companies.

Voluntary adoption means the standards which the company adopted before 2016-17. This was when the MCA brought out the notification related to adopting accounting standards.

There are different benefits of adopting such standards, such as harmonization, following of international accounting principles and globally accepted principles.

Yes, the risk would be primarily with the methods of adoption. For example, following the principles related to such standards would be problematic.

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