Accounting standards are essential guidelines set by regulatory bodies to ensure consistency and transparency in financial reporting. Indian Accounting Standards (Ind AS) align with international norms, specifically the IFRS, to enhance the accuracy and comparability of financial statements. Developed by the Ministry of Corporate Affairs (MCA), Ind AS applies in phases based on company size and net worth, ensuring businesses adopt globally accepted practices while considering Indian regulatory requirements.
What are accounting standards?
Accounting standards are the guidelines issued by certified accounting bodies or by the government or other regulatory agency dealing with the aspects of identification, evaluation, management, presentation, and declaration of accounting transactions in financial statements.
What are Indian Accounting Standards (Ind AS)?
Indian Accounting Standards (Ind AS) are the standards that are used by certain Indian companies that provide assurance regarding the alignment of financial statements with international standards. Ind AS are merged with International Financial Reporting Standards (IFRS) by the Central Government of India. These standards are formed with the assistance and guidance of the Accounting Standards Board (ASB) of the Institute of Chartered Accountants of India (ICAI) and also by the guidance of the National Financial Authority (NFRA). ASB was formed in 1977, and it manages the formulation as well as the applicability of Ind AS, making them the main accounting guidelines that Indian businesses use.
List of Indian Accounting Standards (Ind AS List)
We have included the main set of Indian Accounting Standards in the table.
Indian Accounting Standards | Description |
Ind AS 1 | Representations of Financial Statements |
Ind AS 2 | Inventories |
Ind AS 7 | Statement of Cash Flows |
Ind AS 8 | Accounting Policies, Alterations in Accounting Estimates, and Errors. |
Ind AS 10 | Events occurring after reporting period |
Ind AS 11 | Construction Contracts |
Ind AS 12 | Income Taxes |
Ind AS 16 | Property, Plant and Equipment |
Ind AS 17 | Leases |
Ind AS 18 | Revenue |
Ind AS 19 | Employee allowances |
Ind AS 20 | Accounting related to government grants and reporting of government facilitation
|
Ind AS 21 | The Impacts of alterations in Foreign Exchange Rates |
Ind AS 23 | Borrowing Costs |
Ind AS 24 | Related Party Disclosures |
Ind AS 27 | Splitting of Financial Statements |
Ind AS 28 | Investments in Associates and Joint Ventures |
Ind AS 29 | Financial Reporting in Extreme inflationary 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 Combinations |
Ind AS 104 | Insurance Contracts |
Ind AS 105 | Non-Current Assets and Discontinued Operations Held for Sale |
Ind AS 106 | Investigating and Assessing 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 |
Applicability of Indian Accounting Standards
An extensive summary of the applicability of Indian Accounting Standards (IND AS) is provided below:
Phase-Wise Adoption of IND AS:
To bring Indian Accounting Standards (IND AS) closer to the current accounting standards, the Ministry of Corporate Affairs (MCA) has adopted a phased approach. Businesses of all sizes and complexity levels may move smoothly thanks to this staged adoption.
Phase I (Effective from 1st April 2016)
- Mandatory for: Firms, both listed and unlisted, having a net value of at least ₹500 crore (as determined for the fiscal years 2013–14, 2014–15, and 2015–16).
Phase II (Effective from 1st April 2017)
- Mandatory for: Companies with a net value of between ₹250 crore and ₹500 crore (estimated for the fiscal years 2013–14, 2014–15, 2015–16, and 2016–17) that are listed or in the process of listing (as of March 31, 2016).
Phase III (Effective from 1st April 2018)
- Mandatory for: Banks, insurance firms, and non-banking financial businesses (NBFCs) with a net value of at least ₹500 crore (as determined for the fiscal years 2015–16, 2016–17, and 2017–18).
Note: A distinct set of IND AS for banks and insurance businesses will be announced by the Insurance Regulatory and Development Authority of India (IRDA).
Phase IV (Effective from 1st April 2019)
- Mandatory for: NBFCs between ₹250 crore and ₹500 crore in net value (estimated for the fiscal years 2015–16, 2016–17, and 2017–18).
Important Note:
- Regardless of their net worth, a company’s subsidiaries, holding companies, affiliated firms, and joint ventures must all implement IND AS if it becomes subject to it.
- For standalone financial accounts, Indian firms operating abroad may still employ their jurisdictional accounting rules. For consolidated financial reporting, these businesses must, nevertheless, provide their Indian parent firm with IND AS-adjusted statistics.
Voluntary Adoption of IND AS:
For their financial reporting periods starting on or after April 1, 2015, companies have the option to voluntarily adopt Ind AS. A company that chooses to voluntarily adopt Ind AS must also provide a comparative report for the periods ending March 31, 2015, or later, in order to clearly compare the new and old accounting standards. However, a business cannot go back to the old accounting rules after it has switched to Ind AS.
Difference between Ind AS and IFRS
Some of the key distinctions between IND AS and IFRS are listed below.
Characteristic | IFRS | IND AS |
Definition | Internationally accepted accounting norms.
| IFRS adaptation in India.
|
Created by | International Accounting Standards Board (IASB). | Ministry of Corporate Affairs (MCA), India. |
Enforced by | 144 nations worldwide. | Only used in India.
|
Declaration | Companies are required to declare their adherence to IFRS.
| No such obligation to disclose.
|
Elements of Financial Statement | Statement of financial position. Statement of profit and loss Statement of changes in equity Statement of cash flows | Balance Sheet Profit and loss account Cash flow statement Statement of changes in equity Notes to financial statements Disclosure of accounting policies |
Format of Balance Sheet | Particular rules for both current and non-current categorization.
| There are presenting rules but no particular format constraints.
|
Questions to Understand your Ability
Q1.) What’s the primary reason for adopting Indian Accounting Standards (Ind AS)?
A) To provide clear financial statements for investors
B) To make financial statements match international standards
C) To help companies pay less tax
D) To outline company ownership rules
Q2.) Who’s in charge of creating and applying Ind AS?
A) ICAI (Institute of Chartered Accountants of India)
B) Ministry of Corporate Affairs (MCA)
C) National Financial Authority (NFRA)
D) Accounting Standards Board (ASB)
Q3.) How does India roll out Ind AS?
A) Based on the size of the company’s team
B) According to the company’s net worth
C) Based on the company’s market share
D) Based on a company’s revenue growth
Q4.) Who’s required to adopt Ind AS as of 1st April 2019?
A) Every listed company in India
B) Companies with net worth between ₹250 crore and ₹500 crore
C) Only multinational companies
D) Companies with net worth below ₹250 crore
Q5.) What’s the big difference between Ind AS and IFRS?
A) Ind AS is mandatory everywhere, while IFRS is optional
B) Ind AS is only for India, while IFRS is used globally
C) Ind AS is created by the IASB (International Accounting Standards Board)
D) Ind AS is optional, but IFRS forces companies to follow it
Conclusion
Indian Accounting Standards (Ind AS) align financial reporting with international norms, ensuring consistency and transparency. Developed by the Ministry of Corporate Affairs (MCA) and based on IFRS, these standards apply to companies based on their net worth and are implemented in phases. While Ind AS adopts global principles, it also considers Indian regulations, ensuring that businesses comply with both international and national financial reporting requirements, enhancing reliability and comparability of financial statements.
FAQ's
Accounting standards are guidelines that govern the management, presentation, and declaration of financial transactions in statements, issued by recognized bodies or authorities.
Ind AS ensures that financial statements of Indian companies align with global standards like IFRS, offering transparency and consistency in financial reporting.
In India, the Ministry of Corporate Affairs (MCA) develops Ind AS with assistance from the National Financial Reporting Authority (NFRA) and the Accounting Standards Board (ASB).
There are 32 major Indian Accounting Standards (Ind AS), covering areas like revenue, financial instruments, employee benefits, and more.
Ind AS is adopted in phases starting from 1st April 2016, based on the company’s net worth, with different timelines for various types of businesses.
Yes, companies can voluntarily adopt Ind AS from 1st April 2015, but they must also provide comparative reports for clarity.
Ind AS is India’s version of IFRS, tailored for Indian companies, whereas IFRS is a global standard followed in 144 countries.
Yes, if a parent company adopts Ind AS, its subsidiaries, joint ventures, and affiliates must also comply with Ind AS, even if they’re abroad.
