Accounting Standards in India and its Definition and Scope

Accounting standards in India are guidelines that govern how companies record and present their financial statements to regulatory authorities, investors, and all stakeholders. The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, the Chartered Accountants Act, 1949 (Act No. XXXVIII of 1949) for the regulation and development of the profession of Chartered Accountants in the country, formulates & issue accounting standards in India.

The Indian Accounting Standards (Ind AS), as notified under section 133 of the Companies Act 2013, were first implemented voluntarily in India on April 1, 2015. They became mandatory for certain companies on April 1, 2016, and were later extended to other companies and sectors. The main objective of Indian accounting standards (Ind-AS) is to bring in more transparency of annual financial statements in company accounts. It is a simplified single accounting system common for all companies, cutting out confusion and fraud.

Indian Accounting Standards (Ind AS) is defined as a set of rules that govern how Indian companies record, present, and report their financial statements. The standards are issued by the Institute of Chartered Accountants of India (ICAI) and are based on the International Financial Reporting Standards (IFRS).  The standard has been formulated keeping the Indian economic & legal environment in view and to converge with IFRS Standards, as issued by and copyright of which is held by the IFRS Foundation.

Notwithstanding anything contained in the above paragraph, Ind AS notified under the Companies Act 2013 is governed by the provisions of the Indian Copyright Act, 1957, and the copyright in Ind AS vests in the Government of India.

Benefits of Ind-AS:

Indian Accounting Standards provide a clear and consistent framework for accounting practices, reducing ambiguity and simplifying financial reporting. It ensures companies follow standardized accounting practices, promoting industry consistency and comparability.

Convergence with IFRS Standards, as issued by and copyrighted by the IFRS Foundation, facilitates easier comparison of Indian companies with their global counterparts, enhancing their attractiveness to international investors.

The standardized framework of Ind AS makes financial statements more comparable, helping investors, creditors, and other stakeholders in making decisions. The Indian standard provides a clear framework for auditors, making the auditing process more efficient and effective. Ind AS adoption enhances the credibility of financial statements, increasing investor confidence. It provides a standardized set of metrics for assessing management performance, facilitating better decision-making and accountability.

The below table provides the major list of Indian Accounting Standards:

Indian Accounting Standards Number and Description

Ind AS 1                Presentation of Financial Statements

Ind AS 2                Inventories

Ind AS 7                Statement of Cash Flows

Ind AS 8                Accounting Policies, Changes in Accounting Estimates and Errors

Ind AS 10             Events after Reporting Period

Ind AS 11             Construction Contracts

Ind AS 12             Income Taxes

Ind AS 16             Property, Plant and Equipment

Ind AS 17             Leases

Ind AS 18             Revenue

Ind AS 19             Employee Benefits

Ind AS 20             Accounting for Government Grants and Disclosure of Government Assistance

Ind AS 21             The Effects of Changes in Foreign Exchange Rates

Ind AS 23             Borrowing Costs

Ind AS 24             Related Party Disclosures

Ind AS 27             Separate Financial Statements

Ind AS 28             Investments in Associates and Joint Ventures

Ind AS 29             Financial Reporting in Hyperinflationary Economies

Ind AS 32             Financial Instruments: Presentation

Ind AS 33             Earnings per Share

Ind AS 34             Interim Financial Reporting

Ind AS 36             Impairment of Assets

Ind AS 37             Provisions, Contingent Liabilities, and Contingent Assets

Ind AS 38             Intangible Assets

Ind AS 40             Investment Property

Ind AS 41             Agriculture

Ind AS 101           First-time Adoption of Ind AS

Ind AS 102           Share-Based Payments

Ind AS 103           Business Combinations

Ind AS 104           Insurance Contracts

Ind AS 105           Non-Current Assets Held for Sale and Discontinued Operations

Ind AS 106           Exploration for and Evaluation of Mineral Resources

Ind AS 107           Financial Instruments: Disclosures

Ind AS 108           Operating Segments

Ind AS 109           Financial Instruments

Ind AS 110           Consolidated Financial Statements

Ind AS 111           Joint Arrangements

Ind AS 112           Disclosure of Interests in Other Entities

Ind AS 113           Fair Value Measurement

Ind AS 114           Regulatory Deferral Accounts

Ind AS 115           Revenue from Contracts with Customers

Ind-AS ensures companies in India adopt these standards to implement internationally recognized best practices.