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Convergence of Indian Accounting Standard (IND AS) with Global Accounting Framework IFRS

Convergence of Indian Accounting Standard (IND AS) with Global Accounting Framework IFRS


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Early 2009, India committed to converging IND AS with IFRS in the G20 meeting however suspended its implementation due to some tax issues. The matter again came up during the 2014-15 Indian union budget and the Ministry of Corporate Affairs (MCA) started working in this direction jointly with the Institute of Chartered Accountants (ICA). As of now, 123 countries across the world have already converged their accounting standard with IFRS and India too, as one of the growing world economies is preparing to do so.

Ind-AS and IFRS

Indian law stipulates that all corporate establishments including their auditors must adhere to a standardised set of rules in preparing, reviewing and reporting financial statements to standardise the accounting process and for the ease of comparing financial information amongst companies and accurately predicting the financial health of individual corporates. Ind AS is the accounting standards issued by the Accounting Standards Board (ASB), a committee governed by the Institute of Chartered Accountants of India (ICAI) and represented by government bodies, academicians, and professional institutions such as CII, FICCI, ASSOCHAM, ICAI. MCA, on the other hand, decides on the scope and applicability of these accounting standards and has notified some 39 Ind AS for mandatory adherence.

For consistency in accounting language, practices and statements to improve transparency, International Financial Reporting Standards (IFRS) has long-established some common rules issued by the International Accounting Standards Board (IASB).  The rules specify requirements for maintaining and reporting company books of accounts defining types of transactions and other accounts related activities that affect companies financially. The  IFRS  Foundation stipulates  the  standards  to  “bring  transparency,  accountability  and  efficiency  to  financial markets  around  the  world…  fostering  trust,  growth  and  long-term  financial  stability  in  the  global economy.”

The Ind AS are named and numbered in the same way as the IFRS. The National Advisory Committee on Accounting Standards (NACAS) recommends these standards to the MCA.

Applicability of Ind-AS

As per the Companies Act, 1956, Sub-section 3(A) to 211 specifies that corporate financial statements be compiled as per Indian accounting standards including profit-and-loss accounts and balance sheets and makes these standards mandatory for the following entities

  • Listed companies with listing in India as well as abroad
  • Companies with a net worth of less than Rs 500 crores and preparing for being listed
  • Holding companies, subsidiaries and joint ventures of listed companies
  • Unlisted companies with more than Rs 250 crores net worth
  • Non-Banking Financial Companies (NBFC) exceeding a net worth of Rs 50 crores
  • Holding companies, subsidiaries and joint ventures or associates of NBFCs, with more than Rs 50 crores net worth
  • Unlisted NBFCs with a net worth between Rs 250 crores and Rs 500 crores
  • Holding companies, subsidiaries, joint ventures or associate companies belonging to unlisted NBFCs having a net worth between Rs 250 crores and Rs 500 crores

Other companies not mentioned above may set their own accounting rules in preparing their financial statements under Section 129 of the Companies Act, 2013. However, once a company decides to follow the Ind- AS, it cannot revert to previous accounting methods.

Moreover, once a company goes for Ind-As it becomes automatically applied to all its holding companies, subsidiaries, associated companies and joint ventures, irrespective of its qualifying status.

For Indian companies that have foreign operations, stand-alone financial statements may be made, with the Individual country-specific jurisdictional requirements apply to all Indian companies with overseas operations and these companies must also report their financial numbers as per Ind-AS for their parent company in India.

Benefits and Challenges of Ind-As

 Though strongly recommended owing to several benefits, it also comes with its fair share of challenges while converging Ind-AS with IFRS because of many regulatory and other issues involved.


  1. Enhanced accessibility of Indian companies to the world’s financial capital markets for raising foreign funds on cheaper and more favourable terms facilitating business growth and expansion.
  2. Increased cross Border trade and Investments as the foreign listing will be easier for Indian firms with new market penetration.
  3. Reduced financial reporting as separate and duplicate financial statements will no longer be needed for Indian Companies saving time and money.
  4. More access to knowledge and skills from foreign counterparts.
  5. Higher quality of financial reporting with improved reliability and better acceptability amongst international investors.
  6. Skill development and better career prospects of Indian accounting professionals in foreign countries.


  1. Difficulty in implementation due to inadequate training and skills and a greater need for additional training and qualification.
  2. Legal hurdles requiring amendments in Companies Act 1956, SEBI act 1992, IT Act 1962 etc.
  3. Different results for company performance & earnings due to different systems in determining the value of assets.
  4. An increase in investment and cost due to a need for IT systems overhaul.
  5. Difficulty in implementation in the SME sectors, a major contributor to the Indian economy due to lack of skills and resources.

Though IFRS convergence with the Ind-AS and a successful transition is a big and challenging task, once implemented the Indian businesses can reap significant benefits out of it. Additionally, Indian businesses establishments cannot afford to be indifferent at a time when the government’s topmost economic objective is attracting more foreign investments in India.

The newly framed Ind-AS are the converged form of IFRS and ICAI and, most of the provisions of IFRS have been accepted by MCA as it is.  Barring a few items, almost all other provisions are the same as IFRS.

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