It is mandatory for every Independent legal body to maintain books of account and records in accordance with prevailing Generally Accepted Accounting Principles (GAAP) of the country in order to comply all legal requirements.
To enhance the credibility of the businesses in the eyes of investors, bring transparency of balance sheets & other financial reports and making it easier for investors to compare companies operating in different geographic regions. It requires to harmonize various Generally Accepted Accounting Principles (GAAP) across borders. This is the reason why International Accounting Standards (IAS) and / or International Financial Reporting Standards (IFRS) came into existence.
Such GAAP, IAS, IFRS do take care of legal requirements and investor's interest but do not improve the quality of financial reporting from management point of view therefore each company has their own accounting policies at micro level in order to facilitate management decisions which are bound to differ from GAAP and IAS.
At the time of ERP implementation one has to take into consideration all these GAAP that are involved, IFRS and company policies in accordance with which each company codes needs to maintain their books of accounts and further consolidated reports.
In view of the above:
This also requires process of harmonization of all the involved accounting standards and Integration accordingly.
In INDIA Generally Accepted Accounting Principles are known as "Accounting Standard (AS) in India".
In order to harmonize AS with IAS and IFRS, a process of convergence has been carried out by Ministry of Corporate Affairs (MCA). As a result 35 Indian Accounting Standards are converged with International Financial Reporting Standards and placed on the MCA website in the name and style of "IND AS" which will replace / overwrite Accounting Standard (AS) in India.
(MCA has not yet notified the date of implementation of "IND AS" therefore "AS" is still in force.)
Though AS are converged with IFRS in the name and style of IND AS. IND AS still differs from IFRS at many places.
Given below is a common size chart of IAS, IND AS and AS. A ready reference for all professional colleagues.
Sr # | Particulars | IAS / IFRS | Ind AS | AS |
1 | Presentation of Financial Statements & Disclosure of Accounting Policies | IAS 1 | Ind AS 001 | AS 01 |
2 | Valuation of Inventories | IAS 2 | Ind AS 002 | AS 02 |
3 | Statement of Cash Flows | IAS 7 | Ind AS 007 | AS 03 |
4 | Net Profit or Loss for the period,Prior Period Items and Changes in Accounting Policies | IAS 8 | Ind AS 008 | AS 05 |
5 | Contingencies and Events Occuring after the Balance Sheet Date | IAS 10 | Ind AS 010 | AS 04 |
6 | Construction Contracts | IAS 11 | Ind AS 011 | AS 07 |
7 | Accounting for Taxes on Income. | IAS 12 | Ind AS 012 | AS 22 |
8 | Property, Plant and Equipment | IAS 16 | Ind AS 016 | - |
9 | Leases | IAS 17 | Ind AS 017 | AS 19 |
10 | Revenue Recognition | IAS 18 | Ind AS 018 | AS 09 |
11 | Employee Benefits | IAS 19 | Ind AS 019 | AS 15 |
12 | Accounting for Government Grants and Disclosure | IAS 20 | Ind AS 020 | AS 12 |
13 | The Effects of Changes in Foreign Exchange Rates | IAS 21 | Ind AS 021 | AS 11 |
14 | Borrowing Costs | IAS 23 | Ind AS 023 | AS 16 |
15 | Related Party Disclosures | IAS 24 | Ind AS 024 | AS 18 |
16 | Accounting and Reporting by Retirement Benefit Plans | IAS 26 | - | - |
17 | Consolidated and Separate Financial Statements | IAS 27 | Ind AS 027 | AS 21 |
18 | Accounting for Investments in Associates in Consolidated Financial Statements | IAS 28 | Ind AS 028 | AS 23 |
19 | Financial Reporting in Hyperinflationary Economies | IAS 29 | Ind AS 029 | - |
20 | Financial Reporting of Interests in Joint Ventures | IAS 31 | Ind AS 031 | AS 27 |
21 | Financial Instruments: Presentation | IAS 32 | Ind AS 032 | AS 31 |
22 | Earnings per Share | IAS 33 | Ind AS 033 | AS 20 |
23 | Interim Financial Reporting | IAS 34 | Ind AS 034 | AS 25 |
24 | Impairment of Assets | IAS 36 | Ind AS 036 | AS 28 |
25 | Provisions, Contingent Liabilities and Contingent Assets | IAS 37 | Ind AS 037 | AS 29 |
26 | Intangible Assets | IAS 38 | Ind AS 038 | AS 26 |
27 | Financial Instruments: Recognition and Measurement (Accounting for Investments) | IAS 39 | Ind AS 039 | AS 13 |
28 | Investment Property | IAS 40 | Ind AS 040 | - |
29 | Agriculture | IAS 41 | ||
30 | First-time Adoption of Indian Accounting Standards | IFRS 1 | Ind AS 101 | - |
31 | Share-based Payment | IFRS 2 | Ind AS 102 | - |
32 | Business Combinations, Amalgamations | IFRS 3 | Ind AS 103 | AS 14 |
33 | Insurance Contracts | IFRS 4 | Ind AS 104 | - |
34 | Non-current Assets Held for Sale and Discontinued (Accounting for Fixed Assets) | IFRS 5 | Ind AS 105 | AS 10 |
35 | EOxploration for and Evaluation of Mineral Resources | IFRS 6 | Ind AS 106 | - |
36 | Financial Instruments: Disclosures | IFRS 7 | Ind AS 107 | AS 32 |
37 | Operating Segments Reporting | IFRS 8 | Ind AS 108 | AS 17 |
38 | Financial Instruments | IFRS 9 |
I invite suggestions, comments and criticism on the same from all the experts, mentors, seniors, professionals, colleagues and friends.
Regards
Chirag Shah
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