Overview About IFRS and Ind AS

February 4, 20210
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International Financial Reporting Standards (IFRS) set basic guidelines of financial reporting so that the financial statements of a company can be reliable, transparent, and are comparable across the other companies around the globe. Prior to IFRS, every country has different Generally Accepted Accounting Principles (GAAP) for the businesses to prepare financial statements in their own country. With globalization, it was becoming difficult to undertake cross border transactions, because it was difficult to understand financial statements prepared in different GAAP. To bring harmony in the accounting language, the International Accounting Standards Committee (IASC) started developing the International Accounting Standards (IAS) from the year 1973. The International Accounting Standards Board (IASB) took over the functions from IASC in July 2000. Since then a set of common reporting standards is referred to as IFRS. IFRS has picked up some foothold over the most recent few years, which is vindicated by the way that around 144 out of 166 jurisdictions of the world have adopted IFRS for all or most domestic publicly accountable entities (listed companies and financial institutions).

IFRS are principle-based standards as against rule-based standards. It allows entities to make estimates and judgments based on size and circumstances of the business. There are total 41 reporting standards and 18 interpretations in the set of IFRS, as mentioned below:

A – Guidance issued by IASC before July 2000 and later on adopted by IASB

  • International Accounting Standards (IAS): IAS 1 to 41 (Total 24 standards)
  • Standard Interpretation Committee (SIC) – (Total 5)

B – Guidance issued by IASB after July 2000

  • International Financial Reporting Standards (IFRS): IFRS 1 to 17 (Total 17 standards)
  • IFRS Interpretation Committee (IFRS IC) – (Total 13)
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IFRS in India

India has not adopted IFRS as is, however, decided to adopt reporting standards which are based on IFRS. In India, those standards are called as Indian Accounting Standards Converged with IFRS (Ind AS).. Ind AS is framed with minor deviations in IFRS, called as carve outs. Ind AS is applicable to a certain set of companies from the year 2016-17. Ind AS road map in India is as below:

Mandatory Adoption

Companies (other than banks, NBFCs and Insurance Companies):

  • Listed Companies or Companies in the process of the Listing (debt or equity listed in or outside India).
  • All other unlisted Companies having net worth of INR 250 crores or more.
  • Holding, Subsidiary, joint venture or associates of companies covered above.
  • Companies newly satisfying the threshold above will comply with Ind AS immediately from subsequent year

NBFCs (NA to banks and insurance companies either voluntarily or statutorily):

  • Listed NBFCs or NBFCs in the process of Listing (debt or equity listed in or outside India).
  • All other unlisted NBFCs having net worth of INR 250 Crores
  • Holding, Subsidiary, Joint venture or Associates of companies  covered above
  • By 31 March 2020, all the Companies and NBFC’s above are required to comply with Ind AS. Not applicable to banks and insurance companies

Voluntary Adoption

Companies can voluntarily converge with Ind AS. However, banks and Insurance companies are not allowed to adopt Ind AS voluntarily.

Key Considerations

  • Audited stand-alone financial statements as on 31 March to be considered for the calculation of net worth.
  • Net worth does not include revaluation reserves, write back of depreciation and amalgamation reserve
  • Once Ind AS is followed, it shall be followed for all subsequent years.

Numbering Mechanism of Reporting Standards – IFRS vis-à-vis Ind AS

Sr. No. IFRS Standard Ref. IFRS Standard Name Ind AS Standard Ref. Standard under Ind AS
1 IFRS 1 First Time Adoption of IFRS Ind AS 101 First Time Adoption of Ind AS
2 IFRS 2 Share-Based Payments Ind AS 102 Share-Based Payments
3 IFRS 3 Business Combination Ind AS 103 Business Combination
4 IFRS 4 Insurance Contracts Ind AS 104 Insurance Contracts
5 IFRS 5 Non-current assets held for sale and discontinued operations Ind AS 105 Non-current assets held for sale and discontinued operations
6 IFRS 6 Exploration for and Evaluation of Mineral Resources Ind AS 106 Exploration for and Evaluation of Mineral Resources
7 IFRS 7 Financial Instruments – Disclosures Ind AS 107 Financial Instruments – Disclosures
8 IFRS 8 Operating Segments Ind AS 108 Operating Segments
9 IFRS 9 Financial Instruments Ind AS 109 Financial Instruments
10 IFRS 10 Consolidated Financial Statements Ind AS 110 Consolidated Financial Statements
11 IFRS 11 Joint Arrangements Ind AS 111 Joint Arrangements
12 IFRS 12 Disclosure of Interests in other Entities Ind AS 112 Disclosure of Interests in other Entities
13 IFRS 13 Fair Value Measurement Ind AS 113 Fair Value Measurement
14 IFRS 14 Regulatory Deferral Accounts Ind AS 114 Regulatory Deferral Accounts
15 IFRS 15 Revenue from Contracts with Customers Ind AS 115 Revenue from Contracts with Customers
16 IFRS 16 Leases Ind AS 116 Leases
17 IFRS 17 Insurance Contracts Corresponding standard not yet notified in India
18 IAS 1 Presentation of Financial Statements Ind AS 1 Presentation of Financial Statements
19 IAS 2 Inventories Ind AS 2 Inventories
20 IAS 7 Statement of Cash Flows Ind AS 7 Statement of Cash Flows
21 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors
22 IAS 10 Events After the Reporting Period Ind AS 10 Events After the Reporting Period
23 IAS 12 Income Taxes Ind AS 12 Income Taxes
24 IAS 16 Property, Plant and Equipment Ind AS 16 Property, Plant and Equipment
25 IAS 19 Employee Benefits Ind AS 19 Employee Benefits
26 IAS 20 Accounting for Government Grants and Disclosure of Government Assistance Ind AS 20 Accounting for Government Grants and Disclosure of Government Assistance
27 IAS 21 The Effects of Change in Foreign Exchange Rates Ind AS 21 The Effects of Change in Foreign Exchange Rates
28 IAS 23 Borrowing Costs Ind AS 23 Borrowing Costs
29 IAS 24 Related Party Disclosures Ind AS 24 Related Party Disclosures
30 IAS 26 Accounting and Reporting by Retirement Benefit Plans No corresponding guidance under Ind AS
31 IAS 27 Separate Financial Statements Ind AS 27 Separate Financial Statements
32 IAS 28 Investments in Associates and Joint Ventures Ind AS 28 Investments in Associates and Joint Ventures
33 IAS 29 Financial Reporting in Hyperinflationary Economies Ind AS 29 Financial Reporting in Hyperinflationary Economies
34 IAS 32 Financial Instruments: Presentation Ind AS 32 Financial Instruments: Presentation
35 IAS 33 Earnings per Share Ind AS 33 Earnings per Share
36 IAS 34 Interim Financial Reporting Ind AS 34 Interim Financial Reporting
37 IAS 36 Impairment of Assets Ind AS 36 Impairment of Assets
38 IAS 37 Provisions, Contingent Liabilities and Contingent Assets Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets
39 IAS 38 Intangible assets Ind AS 38 Intangible assets
40 IAS 40 Investment Property Ind AS 40 Investment Property
41 IAS 41 Agriculture Ind AS 41 Agriculture

Interpretations (SIC and IFRS IC)

1 IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities Appendix A – Ind AS 16 Changes in Existing Decommissioning, Restoration and Similar Liabilities
2 IFRIC 2 Members’ Shares in Cooperative Entities and Similar Instruments No corresponding guidance under Ind AS
3 IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Appendix A – Ind AS 37 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
4 IFRIC 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment Appendix B – Ind AS 37 Liabilities arising from Participating in a Specific Market -Waste Electrical and Electronic Equipment
5 IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in

Hyperinflationary economies

Appendix A – Ind AS 29 Applying the Restatement Approach under Ind AS 29
6 IFRIC 10 Interim Financial Reporting and Impairment Appendix A – Ind AS 34 Interim Financial Reporting and Impairment
7 IFRIC 12 Service Concession Arrangements Appendix D Ind AS 115 Service Concession Arrangements
8 IFRIC 14 IAS 19 -The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Appendix B – Ind AS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
9 IFRIC 16 Hedges of a Net Investment in a Foreign Operation Appendix C Ind AS 109 Hedges of a Net Investment in a Foreign Operation
10 IFRIC 17 Distributions of Non-cash Assets to Owners Appendix A Ind AS 105 Distributions of Non-cash Assets to Owners
11 IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments Appendix D Ind AS 109 Extinguishing Financial Liabilities with Equity Instruments
12 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine Appendix B – Ind AS 16 Stripping Costs in the Production Phase of a Surface Mine
13 IFRIC 21 Levies Appendix C – Ind AS 37 Levies
14 SIC-7 Introduction of the Euro No corresponding guidance under Ind AS
15 SIC-10 Government Assistance – No Specific Relation to Operating Activities Appendix A – Ind AS 20 Government Assistance – No Specific Relation to Operating Activities
16 SIC-25 Income Taxes – Changes in the Tax Status of an Entity or its Shareholders Appendix A – Ind AS 12 Changes in the tax status of an entity or its shareholders
17 SIC-29 Service Concession Arrangements: Disclosures Appendix E Ind AS 115 Service Concession Arrangements: Disclosures
18 SIC-32 Intangible Assets – Web Site Costs Appendix A – Ind AS 38 Intangible Assets -Web Site Costs
19 No corresponding guidance under IFRS Appendix C Ind AS 103 Business Combinations of Entities under Common Control
  • Total reporting standards issued under IFRS are 41. Total reporting standards issued under Ind AS are 39.
  • Total interpretations under IFRS (IFRS IC + SIC) are 18. Total interpretation included under Ind AS (Appendix to relevant standards) are 17.

Numbering Mechanism of Reporting Standards – IFRS vis-à-vis Ind AS

  • Total reporting standards issued under IFRS are 41. Total reporting standards issued under Ind AS are 39.
  • Total interpretations under IFRS (IFRS IC + SIC) are 18. Total interpretation included under Ind AS (Appendix to relevant standards) are 17.
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