Indian Accounting Standards (Ind AS)
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- Steps for implementing Indian Accounting Standards
- many types of Indian Accounting Standards adoption criteria, such as IRFS and Ind AS
- Adoption’s effects
Overview of Indian Accounting Standards
Accounting is thought of as the language of a business since it uses financial statements to inform its stakeholders of the financial results of the organisation. The accounting standards are crucial in this situation because an unregulated financial process might harm a company’s reputation.
The Indian Accounting Standards, often known as Ind AS, are the minimal requirements that must be met by a business in order to maintain the books of accounts or to make the disclosures required while generating the financial Statements. They deal with the challenges of transaction and event recognition, presentation, maintenance, and disclosure obligations. The National Financial Reporting Authority suggested the Ministry of Corporate Affairs (MCA) adopt these standards, which are organised similarly to the International Financial Reporting Standards (IFRS) ( NFRA).
The companies in India adopt these Accounting Standards under the supervision of Accounting Standards Board which is an autonomous body constituted in the year 1977 by the Institute of Chartered Accountants of India consisting of academicians’ government depart and other professional .
Bodies that Govern Applicability of Ind As (Indian Accounting Standards)
- The following organisations control the application of Ind As: Securities Exchange Board of India, Institute of Chartered Accountants of India.
- Association of Chambers of Commerce and Industry of India (ACCI), Confederation of Indian Industry (CII), and Federation of Indian Chambers of Commerce and Industry (FICCI) (ASSOCHAM)
- Indian Regulatory Authority for Insurance
- NASS (National Advisory Council on Standards in Accounting) (NACAS)
Objectives of The Indian Accounting Standards
- The application of Ind As is governed by the following organisations: Indian Securities Exchange Board and Indian Institute of Chartered Accountants.
- the Associated Chambers of Commerce and Industry of India, the Federation of Indian Chambers of Commerce and Industry, and the Confederation of Indian Industry (ASSOCHAM)
- India’s insurance regulatory body
- Accounting Standards National Advisory Committee (NACAS)
Applicability of Ind As
The adoption and application of Indian Accounting Standards by all Indian corporations was announced by the Indian government and the Ministry of Corporate Affairs. This announcement was made following the passage of the 2015 Companies (Indian Accounting Standards (IND AS)) Regulations. According to the aforementioned notification, all enterprises who receive it must adopt Ind As gradually over the 2016–17 fiscal year. Three adjustments to the notification have been made since the aforementioned legislation was passed; these took place in 2016, 2017, and 2018.
Benefits of Adopting Indian Accounting Standards
The following are some advantages of using Indian accounting standards:
Due to the company’s devotion to international standards, adopting Indian Accounting Standards can aid in bringing it into line with other nations.
- Expansion of Business
The Indian Accounting Standards are recognised internationally. This can help the company expand their business internationally and set up an international base.
- World Wide Acceptance
All organisations and governmental agencies around the world accept Indian accounting standards.
Following these criteria can aid the business in complying with the law effectively.
Other Information Section
Implementation of Indian Accounting Standards in Phases
According to the Ministry of Corporate Affairs’ notification, the adoption of Indian accounting standards was divided into phases. The phases were divided based on the company’s net worth and listing status.
The following is a list of the phases of adopting Indian accounting standards:
The first phase of Indian Accounting Standards was only required to be followed by Indian corporations starting on April 1st, 2016.
- The business is either listed or not
- be worth more than 500 billion dollars.
The financial statements from the preceding three fiscal years, ending on March 31, 2014, through March 31, 2016, are used to calculate net worth.
As of April 1, 2017, this phase of Indian Accounting Standards was only mandatory for Indian corporations if
- The business is listed or is applying to be listed
- have a net worth between $250 billion and $500 billion for the fiscal years 2014 to 2016.
The net worth is determined using the financial statements from the past four fiscal years, or 31.03.14 through 31.03.17.
As of April 1, 2018, all Indian banks, NBFCs, and insurance businesses are required to comply with this phase.
- The business is listed or is applying to be listed
- be worth more than 500 billion dollars. Wef. April 1, 2018
With effect from 1 April 2018, as announced by IRDA, there are separate Ind AS for Banking and Insurance Companies, along with separate Core Investment Companies, stockbrokers, venture capitalists, etc. All of them are included in NBFCS.
Based on the financial statements from the preceding three fiscal years, or from 31.03.16 to 31.03.18, the net worth was calculated.
All NBFCs in India must comply with this phase as of the date stated above.
2019-04-01 only if
The corporation has a net worth of over $250 billion but under $500 billion.
Either voluntarily or by law, the company may adhere to Indian Accounting Standards. The corporation cannot, however, revert from the same if it is required to adopt Ind AS.
Applicability of Indian Accounting Standards subsidiary or associate companies
The accounting standard will be applicable to all subsidiaries, sister companies, holding companies, and associate companies if an Indian company adopts it. For these kinds of firms, no kind of individual qualification would be taken into account. Hence
It would be automatic for IND AS to apply. The accounting standards must be taken into consideration separately if a foreign corporation owns or controls the business. For those businesses, IND AS wouldn’t need to be implemented.
Services provided under Indian Accounting Standard
- Business consulting services with regard to the application of particular Ind AS & IFRS, such as business merger, consolidation, financial instruments, hedge accounting, leases, and revenue recognition
- IND Accounting standards conversion, planning, and execution.
- easing the transition to the new IND AS criteria.
- assisting in the comparison between Indian Accounting norms and GAAP.
- According to Indian Accounting Standards, assistance is required while deciding which new policies and processes to apply.
- Help with carrying out the suggested improvements to comply with IFRS
- The personnel will receive training on Ind AS concepts and requirements as needed.
- assistance with financial statement compilation in accordance with IND Accounting Standards.
List of Applicable Indian Accounting Standards
The following table provides a list of the major applicable Ind AS as on 01/02/2022
Enterslice Assistance Section
Indian Accounting Standards: Our Role
Help with adopting accounting standards.
supplying adequate support for comparing Indian GAAP and Ind As.
assistance with the implementation of adjustments found to harmonise to Ind AS.
teaching essential accounting standard principles and prerequisites to the company’s employees.
assistance with financial statement gathering.
Frequently Asked Questions
What are Indian Accounting Standards?
Ind As stands for Indian Accounting Standards. All businesses in India are required to follow these requirements.
What is the difference between Indian Accounting Standards and IFRS?
Global accounting standards, which are created and applied globally, are related to IFRS. India has created and is using its own accounting standards.
Who developed these standards?
The Accounting Standards Board oversaw and kept an eye on the development of the Ind As (ASB). In 1977, the accounting standards board was established as a regulating agency.
What is the meaning of the phased approach related to adoption and implementation?
A staged strategy to adoption and implementation refers to the methodology that all businesses must follow.
Do all companies follow these standards?
NBFCs, insurance firms, publicly traded enterprises, and SEBI-regulated businesses must adhere to these requirements.
What is the difference between voluntary adoption and mandatory adoption?
Standards implemented by the company prior to 2016–17 are considered voluntary adoption. At this time, the MCA released the notification pertaining to the adoption of accounting standards.
What are the major benefits of adopting such standards?
Adopting such standards has a number of advantages, including harmonisation, adherence to international accounting rules, and adoption of universally recognised concepts.
Are there any forms of problems or risks applicable to such adoption?
Certainly, the techniques of adoption would be the main source of risk. For instance, it would be difficult to adhere to the guiding principles of such standards.