IFRS – International Financial Reporting Standards

• Recognition of items as assets, liabilities, income and expenses; 
• How to measure items recognised and its presentation in financial statements; and
• Disclosures related to such items.

Objective of IFRS:

IFRS was introduced with an object to bring consistency in the accounting practices and principles followed by companies of various nations while preparing financial statements. Another object was to provide framework for nations across the globe on how companies and entities should prepare and present their financial statements. It also brings synchronisation in accounting practices across various nations to facilitate comparison of financial statements. It is of more significance for those companies which have dealings in several countries.

Benefits of IFRS:

IFRS have many benefits, some of which are discussed below: • Wider acceptability: IFRS are widely acceptable. It is applicable to almost 166 jurisdictions out of which approximately 144 jurisdictions have adopted IFRS Thus, financial statements prepared as per IFRS are widely acceptable. • Comparability of Financials: Since IFRS are global standards, companies of different nations following IFRS can be easily compared. • Elaborated Guidance: IFRS provides elaborated guidance on how to apply principles given in standards in different situations. • Changes in standards as per economic situations: Principles of IFRS are revised/modified in case there is any major change in economy.

Application of IFRS:

1. Adoption of IFRS: 

Applicability of IFRS in India:

India has opted to apply IFRS after making certain deviations from the original IFRS (also known as carve outs). In India, IFRS in their converged form (after required modifications) are popularly known as Ind AS. Each individual Ind AS contains an Appendix that explains the modifications. These Ind AS are applicable to specified category of as discussed below: In case of Companies: 1. Companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India; 2. Unlisted companies having net worth of Rs. 250 crore or more; and 3. Holding, subsidiary, joint venture or associate companies of companies covered in point (1) and (2) above. Voluntary applicability: Company may voluntarily apply Indian accounting standards (Ind AS). Companies on which Ind AS is not applicable will continue to follow existing Accounting Standards (AS) which will be upgraded by ICAI.