Here’s all you need to know about Ind-AS!
What is Ind-AS?
Ind-AS is the abbreviated form of Indian Accounting Standards. The Ind-AS framework comprises the rules & regulations for accounting as well as the recording of financial transactions along with the presentation of financial statements such as profit & loss account and the balance sheet of a company.
Why was it introduced?
The main aim of introducing Ind-AS was to bridge the gap between Indian and international accounting standards. It ensured that the Indian accounting standards were at par with the global standards. Since the environment in which the Indian companies operated was different, adoption of International Financial Reporting Standards (IFRS) was not possible. So, it was decided to converge the Indian accounting rules with IFRS. In simple terms, Ind-AS is the alignment of Indian accounting rules with IFRS.
Who recommended it?
National Advisory Committee on Accounting Standards (NACAS) recommended Ind-AS to the Ministry of Corporate Affairs (MCA). These standards were introduced on April 1, 2015, in a phased manner to ensure their smooth adoption.
At present, seven institutions govern the applicability of Ind-AS. They are as follows: Institute of Chartered Accountants of India (ICAI), Confederation of Indian Industry (CII), National Advisory Committee on Accounting Standards (NACAS), Federation of Indian Chambers of Commerce & Industry (FICCI), Associated Chambers of Commerce & Industry of India (ASSOCHAM), Securities & Exchange Board of India (SEBI), and Insurance Regulatory Development Authority of India (IRDAI).
How is it helpful?
Accounting, as per the Ind-AS framework, ensures greater transparency. Foreign investors, looking to invest in domestic companies, find it easier to assess the financial strength of the companies that use Ind-AS. This is because the accounting principles are aligned with international standards.