Module 4: IND AS and IFRS

 Implementation and Applicability in India,

 Listof IND AS [Indian Accounting Standards] issued
on date
 International Accounting in Current Scenario – List
of International Financial Reporting Standards.
 Difference between Companies Accounting Standard
Rules, 2006 and IND AS.
 Need For International Accounting
Standards
• Diversified investment opportunities across the world
• Different countries maintaining their own sets of national accounting
standards.
• Added cost, complexity and ultimately risk both to companies preparing
financial statements and investors and others using those financial
statements to make economic decisions.
• Applying national accounting standards meant amounts reported in financial
statements might be calculated on a different basis. Unpicking this
complexity involved studying the minutiae of national accounting standards,
because even a small difference in requirements could have a major impact
on a company’s reported financial performance and financial position
 Need For International Accounting
Standards
• International Accounting Standards address this challenge by
providing a high quality, internationally recognised set of accounting
standards that bring transparency, accountability and efficiency to
financial markets around the world.
• Brings transparency
• Strengthen accountability
• Contributes to economic efficiency
IFRS FOUNDATION
 IFRS Foundation
• The IFRS Foundation was established in March 2001, after it was decided to
restructure the IASC into two main bodies: the Trustees and the IASB
• The IFRS Foundation is a non-profit making body with a number of trustees’.
The trustees are responsible for:
appointing the members of the IASB, the International Financial Reporting
Interpretations Committee and IFRS Advisory Council;
reviewing annually the strategy of the IASB and its effectiveness;
 approving annually the budget and determining the funding of the IASB;
reviewing broad strategic issues affecting accounting standards;
 promoting the IASB and its work and the rigorous application of IASs;
establishing and amending operating procedures for the IASB, IFRS Interpretations
Committee and IFRS Advisory Council.
 International Accounting Standard Board
• The International Accounting Standards Board (IASB) was formed to take over the
work of the International Accounting Standards Committee (IASC) in April 2001.
• The IASB consists of a number of members and is responsible for developing
international accounting standards, now referred to as International Financial
Reporting Standards (IFRS Standards).
• All members are appointed for a term of 5 years, renewable once.
• The IASB has complete responsibility for all IASB technical matters, including the
preparation and publication of IFRS Standards, Exposure Drafts, withdrawal of
IFRS Standards and final interpretations by the IFRS Interpretations Committee.
• The IASB have also adopted all IAS that were previously issued by the IASC.
 Objectives
• To develop, in the public interest, a single set of high-quality, understandable
and enforceable global reporting standards that require high-quality,
transparent and comparable information in financial statements.
• To promote the use of rigorous application of those standards;
• To take account of the needs of a range of sizes and types of entities in
diverse economic settings (e.g. emerging economies); and
• To promote and facilitate adoption of IFRSs through the convergence of
national accounting standards and IFRS
 IFRS Advisory Council
• The IFRS Advisory Council has approximately 30 members and provides a
forum for organisations and individuals to participate in the standard setting
process.
• The members are appointed by the trustees from various backgrounds, for a
renewable term of 3 years and meet three times a year.
• The objectives of the IFRS Advisory Council are:
• to give advice to the IASB on agenda decisions and priorities in its work;
• to inform the IASB of the views of organisations and individuals on the Council on
major standard setting projects;
• to give other advice to the Board or to the Trustees.
 IFRS Interpretations Committee (IFRSIC)
• IFRIC assists the IASB by reviewing accounting issues that are likely to receive
divergent or unacceptable treatment in the absence of authoritative guidance,
with a view to reaching an appropriate accounting treatment.
• It was established in 2002 by the IFRS Foundation to replace the Standing
Interpretations Committee (SIC).
• Previously SIC Interpretations were issued, now IFRS Interpretation Committee
Interpretations are issued.
• The IFRS Interpretations Committee has two main responsibilities:
1. Review, on a timely basis, new financial reporting issues not specifically
addressed in IFRSs.
2. Clarify issues where unsatisfactory or conflicting interpretations have developed,
with a view to reaching a consensus on the most appropriate treatment.
 Convergence
• Convergence means alignment of the standards of different
standard setters with a certain rate of compromise, by adopting the
requirements of the standards either fully or partially.
• The IASB Constitution envisages a "partnership" between the IASB
and National Standard Setters (NSSs) as they work together to
achieve the convergence of accounting standards world-wide.
• Convergence is a gradual process by which local GAAP approaches
and is replaced with IFRS. As a step-by-step transition process it:
 gives more time for preparation;
 reduces the potentially negative effect on companies trading their shares.
 Benefits of Convergence
• Reshape its management reporting systems to better manage both its financial
accounting and its financial statement generation and provide company
leadership with essential information
• Improve disclosure — to analysts, investors, regulators and other stakeholders
— of your company's financial results and position and other performance
indicators
• Improve the metrics used to evaluate both company and executive performance
• Benchmark itself against its global peers
• Ensure all finance team members have the training, knowledge and skills
needed to perform their roles
• Make accounting policy choices that are aligned with global industry practice
 IFRS and India
MINISTRY OF CORPORATE AFFAIRS NOTIFICATION
New Delhi, 16th February, 2015
• Notified the Companies (Indian Accounting Standards (IND AS)) Rules
2015, which stipulated the adoption and applicability of IND AS in a
phased manner beginning from the Accounting period 2016-17.
• The MCA has since issued three Amendment Rules, one each in year
2016, 2017, and 2018 to amend the 2015 rules.
 Indian Accounting Standards
• The IND AS are basically standards that have been harmonised with
the IFRS to make reporting by Indian companies more globally
accessible.
• Since Indian companies have a far wider global reach now as
compared to earlier, the need to converge reporting standards with
international standards was felt, which has led to the introduction of
IND AS.
• MCA has notified a phase-wise convergence to IND AS from current
accounting standards. IND AS shall be adopted by specific classes of
companies based on their Net worth and listing status.
Phase of transition
 Phases Of Adoption / Implementation
Phase I (Mandatory applicability of IND AS to all companies from 1st
April 2016, provided:)
1. Companies listed or in the process of listing in India or outside India
with a net worth equal to or more than Rs. 500 crores
2. Unlisted companies having a net worth equal to or more than Rs. 500
crores
3. Holding, subsidiary, joint venture, and associate of the above
companies

*Net worth shall be checked for the previous three Financial Years
(2013-14, 2014-15, and 2015-16).
Phase II
Mandatory applicability of IND AS to all companies from 1st April
2017, provided:
• All the companies that are listed or in the process of listing in India or
outside India that are not covered in Phase-I
• Unlisted companies with a net worth of Rs. 250 crores or above but
less than Rs. 500 crores
• Holding, subsidiary, joint venture, and associate of the above
companies
Phase III
Mandatory applicability of IND AS to all Banks, NBFCs, and Insurance
companies from 1st April 2018, whose:
• Net worth is more than or equal to INR 500 crore with effect from 1st
April 2018.
• IRDA (Insurance Regulatory and Development Authority) of India shall
notify the separate set of IND AS for Banks & Insurance Companies
with effect from 1st April 2018.
• Net Worth shall be checked for the past 3 financial years (2015-16,
2016-17, and 2017-18)
Phase IV
• All NBFCs whose Net worth is more than or equal to INR 250 crore
but less than INR 500 crore shall have IND AS mandatorily applicable
to them with effect from 1st April 2019.
Companies Accounting Standard Rules,
2006 and IND AS
Companies (Accounting Standards) Rules, 2021.
 Obligation to comply with Accounting Standards.
 Every company, other than companies on which Indian Accounting
Standards as notified under Companies (Indian Accounting Standards)
Rules, 2015 are applicable, and its auditor(s) shall comply with the
Accounting Standards in the manner specified in the Annexure.
 The Accounting Standards shall be applied in the preparation of
Financial Statements.
 The Central Government hereby specifies Accounting Standards 1 to 5, 7
and 9 to 29 as recommended by the Institute of Chartered Accountants
of India, which are specified in the Annexure to these rules.
 Small and Medium Sized Company
“Small and Medium Sized Company” (SMC) means, a company-
 (i) whose equity or debt securities are not listed or are not in the process of listing
on any stock exchange, whether in India or outside India;
 (ii) which is not a bank, financial institution or an insurance company;
 (iii) whose turnover (excluding other income) does not exceed two hundred and fifty
crore rupees in the immediately preceding accounting year;
 (iv) which does not have borrowings (including public deposits) in excess of fifty
crore rupees at any time during the immediately preceding accounting year; and 2
 (v) which is not a holding or subsidiary company of a company which is not a small
and medium-sized company.
Contd.

 The Accounting standards as specified in Annexure to the Companies

(Accounting Standards) Rules, 2006 shall be the Accounting Standards
applicable to the companies other than the classes of companies
specified in rule 4.
 The accounting standards as specified in the Annexure to these rules
to be called the Indian Accounting Standards (Ind AS) shall be the
accounting standards applicable to classes of companies specified in
rule 4.
Accounting Standard
IndAS
IAS and IFRS
IFRS