IFRS and IND AS

IFRS and IND AS stands for International Financial Reporting Standards and Indian Accounting Standards respectively. IFRS and IND AS are accounting standards adopted by the companies in India. The main circumstance in respect of which IFRS and IND AS vary significantly is prescribed in terms of what to report, how it should be reported and when it should be reported.

What is IFRS?

According to International Financial Reporting Standards (IFRS) to report a company’s financial position, results of operations and cash flow as of a particular date. Basic objective of International Financial Reporting Standards (IFRS) is to reproduce the financial statements prepared by the company in the year being reported.

International Financial Reporting Standards (IFRS) includes five documents namely: 

i.) IFRS 1 Presentation of Financial Statements 

ii.) IFRS 7 Financial Instruments 

iii.) IFRS 8 Operating Segments 

iv.) IFRS 9 Financial Instruments and

iv.) IFRS 10 Consolidated Financial Statements.

Use of IFRS

Any company which is registered under the Companies Act, 1956 will have to comply with IFRS from the year 2012. Similarly, companies that are preparing financial statements which are required to be filed in India under the Companies Act 2013 will need to follow IFRS.

What is IND AS?

Indian Accounting Standards (IND AS) is decided by the Institute of Company Secretaries of India. The main objective of IND AS is to enable companies to prepare financial statements in a standard way in order to draft the financial statements in accordance with the Information Technology Act, 2000.

Difference between International Financial Reporting Standards and Indian Accounting Standards

Reporting Period

The difference between international financial reporting standards and Indian accounting standards is in respect of the reporting period. The international financial reporting standards permits companies to report on the financial statements quarterly which will be three months in duration. On the other hand, the Indian Accounting Standards permits companies to report on their financial statements annually which will be 12 months in duration.

Filing Date

The filing date for Indian Accounting Standards is five years after a company’s first financial statement is filed with its Registrar of Companies or thereafter as per provisions of any other law for companies registered under Companies Act 1956 or any other law for companies registered under Companies Act, 2013. On the other hand, the filing date for International Financial Reporting Standards is three years after a company’s first financial statement is filed with its Registrar of Companies or thereafter as per provisions of any other law for companies registered under Companies Act 1956 or any other law for companies registered under Companies Act, 2013.

Extent to which IFRS will be applicable

The extent to which Indian Accounting Standards will be applicable in India is limited to the functions which are described in Section 39 of the Indian Accounting Standards. The provisions of Section 39 permit Indian Accounting Standards with certain modifications and deletions to be applied on a compulsory basis in certain cases. On the other hand, International Financial Reporting Standards will be applicable to the full extent possible within Section 39 of the Indian Accounting Standards.

Choice of language

Indian Accounting Standards does not permit companies to choose their own language for preparing financial statements. On the other hand, International Financial Reporting Standards does not impose any limitation on the choice of a company’s language for preparing its Statement of Financial position, Statement of Changes in Equity, Statement of Cash Flows and Notes thereto.

Other

It is to be noted that International Financial Reporting Standards are to be applied by Indian companies for accounting periods beginning on or after 1 April 2013. However, it is not mandatory that every company should switch over from Indian Accounting Standards and adopt International Financial Reporting Standards.  

Conclusion

The main objective behind adopting Indian Accounting Standards is to equip the companies with a more robust system that is simpler and updated. The main objective behind adopting International Financial Reporting Standards is to equip an Indian company with a functional standard that can be used throughout the country and world over. In brief, the main difference between IFRS and IND AS is that the reporting period prescribed in respect of both these standards is different. Other than this, there are certain other differences as well. I hope this article will help you to understand the difference between IFRS and IND AS along with their similarities and differences.