It’s difficult to comprehend the differences between International Accounting Standards and Indian Accounting Standards if you’re just starting in accounting. The International Accounting Standards is the full form of IAS. The IASB (International Accounting Standards Board), a non-profit, independent body, prepared and revised it. The International Financial Reporting Standards (IFRS) are utilized in 110 countries and are one of the most widely used accounting standards.
Indian Accounting Standards, on the other hand, is a set of accounting standards which are established expressly for the Indian setting. Indian Accounting Standards (IND AS) or the Indian version of the International Financial Reporting Standards (IFRS) is another name for IND AS. When it comes to accounting records, the majority of Indian enterprises adopt Indian AS.
Differences Between Indian Accounting Standards and International Accounting Standards
- Differences based on What they Entail
The International Accounting Standards, now known as International Financial Reporting Standards refers to the accounting guidelines and regulations followed by each nation. In the last couple of years, the monetary situation has changed drastically all around the world. Few transitional groups are now working in a number of countries to resolve IFRS convergence-related situations. The standard, which can also be widely acknowledged globally, therefore needs to be maintained. It is also known as the objective of setting a certain set of standards that everyone can utilize nationally and worldwide.
In the context of Indian firms, the abbreviation IND AS is used. Throughout the period, such standards were established in India. These standards are often known as Ind As. Such standards must be adopted under the monitoring and supervision of the Accounting Standards Board (ASB) under a distinct type of corporation and NBFCs in India. In 1977, the Accounting Standards Board was established as a regulating organization and authority.
The ASB is an independent and professional body controlled by the Institute of Chartered Accountants of India (ICAI). Other organizations that govern ASB requirements include the Federation of Indian Chambers of Commerce and Industry (FICCI), the Confederation of Indian Industry (CII), and the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
People, professors, and scholars from the abovementioned body present various accounting standards. Indian Accounting Standards were created in order to unify worldwide accounting and reporting standards. The International Financial Reporting Standards (IFRS) contain international accounting standards (IFRS). The National Advisory Committee on Accounting Standards (NACAS), an Indian government organization, recommended these standards to the Ministry of Corporate Affairs.
- Differences based on Issuing Body
The Central Government of India in collaboration with the National Advisory Committee on Accounting Standards developed Indian Accounting Standards (NACAS). The Accounting Standards Board (ASB) of the ICAI oversaw and controlled the process. NACAS recommended the Indian AS to the Ministry of Corporate Affairs, which has the authority to apply it to Indian companies. The Ind AS have the same names and numbers as their IFRS equivalents. There have been 40 Indian AS issued so yet.
The International Accounting Standards Board (IASB), an independent international standard-setting body based in London, issued previous accounting standards known as International Accounting Standards (IAS). The International Accounting Standards Board (IASB) is the IFRS Foundation’s independent accounting standard-setting organization. It is one of the most widely used accounting standards.
The Board of Directors is an impartial group of specialists with an adequate combination of practical experience recently gained with accounting standards, auditing, preparing, or using financial reports, and in accounting education. It’s also necessary to have a lot of geographical diversity. The IFRS Foundation Constitution sets out the complete qualifications for the Board membership and the geographical allocation on the individual profiles can be viewed.
The members of the Board shall establish and publish the IFRS standards, including the IFRS Standard for SMEs. The IFRS Interpretation Committee also has the responsibility of approving the interpretation of IFRS Standards (formerly IFRIC). The International Financial Reporting Standards replaced the IAS in 2001 (IFRS). When balancing accounts, international accounting is a subset of accounting that takes international accounting standards into consideration
- Differences based on Significance
The Indian AS supports cross-border cash flows, makes global listing easier, and allows international comparability of the financial statement This encourages worldwide investments, which benefits all stakeholders in the capital market. The Indian AS assists the investor in making a global comparison of investments. There is no need to reinstate the financial statements of Indian corporations now that the Indian AS is in existence.
The aim was initially to simplify comparison between organizations worldwide, enhance transparency and confidence in financial reporting, and promote worldwide trade and investment. This enhances capital allocation by allowing investors and other market participants to make informed economic judgments about investment possibilities and risks.
Universal standards can help organizations with multinational operations and subsidiaries in different countries save money on reporting and regulatory compliance.
- Differences based on Applicability
Indian AS’s first fiscal year was 2011, but the Ministry of Corporate Affairs postponed it due to some concerns. The Ministry of Corporate Affairs published the Companies (Indian Accounting Standards) Rules in February 2015. Banking, insurance, and non-bank financial companies were left out of the updated implementation roadmap.
Since 1 April 2015, IND AS has been introduced voluntarily and made necessary by notification on 1 April 2016. The notifications released thereafter covered the implementation of the NBFCs, banking, and insurance firms. A company can freely or mandatorily follow IND AS. But, once it starts following the Ind AS, it cannot revert to its old method of accounting.
The International Accounting Standards Foundation was the IFRS Foundation’s predecessor body (IASF). On February 6, 2001, it was founded. On July 1, 2010, the Foundation has renamed the International Financial Reporting Standards Foundation (IFRS Foundation). It has been incorporated in Delaware, the USA as a non-profit company that operates independently. Its main mission under its Constitution is, in the public interest, to produce a single set of international financial reporting standards (IFRS) that are high quality, intelligible, enforceable, and universally acknowledged, based on clearly articulated principles.
- Differences based on Revenue
In the case of IFRS, revenue is always determined as the fair value of the consideration receivable or received. On the other hand, according to the Indian AS, revenues are taken into account if the companies charge products/services and also benefit firms by employing their resources.
- Differences based on Exchange Rate
According to IFRS, the Company’s assets and liabilities are transformed into an exchange rate if it does not use its functional currency. Indian AS, on the other hand, does not require an exchange rate because it is solely relevant to Indian enterprises.
- Differences based on Disclosure of the statement
Whenever a corporation complies with IFRS, it must indicate that they comply with the IFRS in the form of a note. However, the declaration is not obligatory for the Indian AS. When an organization is deemed to be following the Indian AS, the truth and fairness of its financial activities are presumed to be in conformity to the Indian AS.
Conclusion
The context is the most crucial aspect of both IFRS versus Indian AS accountability requirements. We use these to make an enormous difference in this context. Furthermore, comparing these two IFRS vs. Indian As accounting standards provides insight into the benchmarks that each of these IFRS vs. Indian As accounting standards has established for themselves.
What works in one country may not work in another, and vice versa. This is why in the respective settings, the applicability of these two IFRS vs Indian AS standards remains relevant.