With the current trend of globalization and liberalization, the world has become an economic village. The globalization of the business world, the attendant structures, and regulations make it imperative to have a single globally accepted financial reporting system. Considering the complexity and inconsistencies in global transactions and its reporting, single set of globally accepted accounting standards has prompted many countries to pursue convergence of national accounting standards with IFRS (Principle bases standards). Converged standards adopted by India are termed as Ind AS.
Ind AS is made applicable in a phased manner from 1st April 2016. Listed companies, companies with net worth of more than or equal to INR 500 crores to apply Ind AS from 1st April 2016 with comparatives of 31st March 2016. Companies with net worth of more than or equal to INR 250 crores needs to apply from 1st April 2017.
Banks and Insurance Companies to apply Ind AS from 1st April 2019 and 2020, respectively.
Listed NBFCs and NBFCs with whose net worth is more than or equal to INR 500 crores to apply Ind AS from 1st April 2018 and NBFCs with net worth of more than or equal to INR 250 crores needs to apply from 1st April 2019.
Holding, subsidiary, joint venture or associate companies of companies covered above will also have to comply with Ind AS. Another important point to note is that once Ind AS is applied, it needs to be applied consistently in the future.
Entities that are not falling into above criteria will have to continue with existing Indian GAAP.
List of Ind ASs is provided in the below table:
Accounting Standards (AS) are written documents and policies that provides principles for recognition, measurement, treatment, presentation, and disclosures of accounting transactions in the financial statements. Accounting standards ensure consistency in the preparation of financial statements within the bounds of rationality, thereby ensuring the comparability of financial statements of different enterprises.
For applicability and compliances purposes, enterprises are classified into Level I, II and III companies’ basis which standards are applicable.
Holding and subsidiary enterprises of any one of the above at any time during the accounting period will need to comply with Indian GAAP.
List of accounting standards and applicability at entity level is provided in the below table.