Accounting Standards, IFRS and IND-AS

Introduction:- Accounting as a language of business tells financial result or position of enterprises to shareholders or owner by means of financial statement. If accounting process or system is not proper, than there are chances that financial statement could be misleading and not showing fair view. So in order to make accounting or financial statement transparent, consistent, comparable, adequate and reliable, there is requirement to make accounting standardize to make accounting principle and policies. Accounting standard provide framework and standard accounting policies so that financial statement of different enterprises become comparable.

Meaning of accounting standard: The accounting standards are set of guidelines i.e. Generally Accepted Accounting Principles, that are followed for preparation and presentation of financial statements. They are accounting rules and procedures relating to measurement, recognition, treatment, presentation and disclosures of accounting transactions in the financial statements issued by the council of the institute of chartered Accountant of india.


1. Main objective of accounting standards are harmonizing accounting policies and practice followed by different enterprises so that comparison of different enterprises can be done easily.

2. It reduce accounting alternative for preparing financial statement to maintain harmonization.

3. promote better understanding of financial statements.

4. enhances reliability of financial statements.

5. understand significant accounting policies adopted and applied.

Benefits:- There are following benefits

-It reduces variation between different enterprises for accounting treatment used to prepare financial statement.

-Standards discloses all information even which are not required by law.

-It helps in comparison of financial statement of companies situated in different parts of countries or world.


-When there are alternative of many accounting treatment, choice of best alternative generally become difficult.

-Standards are rigid not flexible for applying accounting treatment.

-Standards can not override statute. It has to follow requirement of statute.

Overview of Accounting Standard in India

-ICAI constitute Accounting Standard Board ( ASB ) on 21st April 1977.

-Main Function of ASB to formulate Accounting Standards.

-ASB issued so far 32 Accounting Standard but AS-8 (Accounting for Research and development ) and AS-6(depreciation) have been withdrawn so there are 30 Accounting Standards.

INTERNATIONAL FINANCIAL REPORTING STANDARDS(IFRS):-- Globalisation integrates the national economies into the international economies through trade, foreign direct investments, capital flow etc. in this age of globalization and technology, enterprises are carrying on businesses worldwide. We also understand that accounting is the language of business. Thus business enterprises around the world should not speak different languages while sharing financial informations. Therefore there is need for single set of accounting standards that can unify the accounting practices worldwide. It is difficult to understand and compare worldwide financial informations without a common set of accounting and financial reporting standards. The use of single set of high quality accounting standards would facilitate investment and other economic decisions across borders, increase market efficiency and reduce cost of capital. Thus international accounting standards (IAS) were developed, which are being withdrawn and superseded by International Financial Reporting Standards(IFRS).IFRS are a set of accounting standards developed by the international Accounting standards board(IASB)


1. Accrual Assumption

2. Going concern assumption

3. Measuring unit assumption: measuring unit for valuation of capital is the current purchasing power. It means asset should be reflected at current(fair) price.

4. Constant purchasing power assumption:- it means value of capital be adjusted to inflation in the economy at the end of financial year.

APPLICATION OF IFRS IN INDIA:- India had two options, i.e. either to accept IFRS as they are or converge the Indian accounting standards in line with IFRS. It decided to converge its existing accounting standards with IFRS. The converged accounting standards titled Ind-AS have been issued and notified. It should be noted that the existing Indian accounting standards shall not cease to be applicable standards. They will continue to apply on entities that are not required to migrate to IND-AS.

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