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It is mandatory for every Independent legal body to maintain books of account and records in accordance with prevailing Generally Accepted Accounting Principles (GAAP) of the country in order to comply all legal requirements.


To enhance the credibility of the businesses in the eyes of investors, bring transparency of balance sheets & other financial reports and making it easier for investors to compare companies operating in different geographic regions. It requires to harmonize various Generally Accepted Accounting Principles (GAAP) across borders. This is the reason why International Accounting Standards (IAS) and / or International Financial Reporting Standards (IFRS) came into existence.


Such GAAP, IAS, IFRS do take care of legal requirements and investor’s interest but do not improve the quality of financial reporting from management point of view therefore each company has their own accounting policies at micro level in order to facilitate management decisions which are bound to differ from GAAP and IAS.


At the time of ERP implementation one has to take into consideration all these GAAP that are involved, IFRS and company policies in accordance with which each company codes needs to maintain their books of accounts and further consolidated reports.

In view of the above:

  • Operative chart of account is to be designed as per company policies,
  • Country chart of account is to be designed as per GAAP and
  • Group chart of account is to be designed as per IAS / IFRS.


This also requires process of harmonization of all the involved accounting standards and Integration accordingly.


In INDIA Generally Accepted Accounting Principles  are known as “Accounting Standard (AS) in India”.


In order to harmonize AS with IAS and IFRS, a process of convergence has been carried out by Ministry of Corporate Affairs (MCA). As a result 35 Indian Accounting Standards are converged with International Financial Reporting Standards and placed on the MCA website in the name and style of “IND AS” which will replace / overwrite  Accounting Standard (AS) in India.

(MCA has not yet notified the date of implementation of “IND AS” therefore “AS” is still in force.)


Though AS are converged with IFRS in the name and style of IND AS. IND AS still differs from IFRS at many places.


Given below is a common size chart of IAS, IND AS and AS. A ready reference for all professional colleagues.


Sr #

Particulars

IAS / IFRS

Ind AS

AS

1

Presentation of Financial Statements & Disclosure of Accounting Policies

IAS 1

Ind AS 001

AS 01

2

Valuation of Inventories

IAS 2

Ind AS 002

AS 02

3

Statement of Cash Flows

IAS 7

Ind AS 007

AS 03

4

Net Profit or Loss for the period,Prior Period Items and Changes in Accounting Policies

IAS 8

Ind AS 008

AS 05

5

Contingencies and Events Occuring after the Balance Sheet Date

IAS 10

Ind AS 010

AS 04

6

Construction Contracts

IAS 11

Ind AS 011

AS 07

7

Accounting for Taxes on Income.

IAS 12

Ind AS 012

AS 22

8

Property, Plant and Equipment

IAS 16

Ind AS 016

9

Leases

IAS 17

Ind AS 017

AS 19

10

Revenue Recognition

IAS 18

Ind AS 018

AS 09

11

Employee Benefits

IAS 19

Ind AS 019

AS 15

12

Accounting for Government Grants and Disclosure

IAS 20

Ind AS 020

AS 12

13

The Effects of Changes in Foreign Exchange Rates

IAS 21

Ind AS 021

AS 11

14

Borrowing Costs

IAS 23

Ind AS 023

AS 16

15

Related Party Disclosures

IAS 24

Ind AS 024

AS 18

16

Accounting and Reporting by Retirement Benefit Plans

IAS 26

17

Consolidated and Separate Financial Statements

IAS 27

Ind AS 027

AS 21

18

Accounting for Investments in Associates in Consolidated Financial Statements

IAS 28

Ind AS 028

AS 23

19

Financial Reporting in Hyperinflationary Economies

IAS 29

Ind AS 029

20

Financial Reporting of Interests in Joint Ventures

IAS 31

Ind AS 031

AS 27

21

Financial Instruments: Presentation

IAS 32

Ind AS 032

AS 31

22

Earnings per Share

IAS 33

Ind AS 033

AS 20

23

Interim Financial Reporting

IAS 34

Ind AS 034

AS 25

24

Impairment of Assets

IAS 36

Ind AS 036

AS 28

25

Provisions, Contingent Liabilities and Contingent Assets

IAS 37

Ind AS 037

AS 29

26

Intangible Assets

IAS 38

Ind AS 038

AS 26

27

Financial Instruments: Recognition and Measurement (Accounting for Investments)

IAS 39

Ind AS 039

AS 13

28

Investment Property

IAS 40

Ind AS 040

29

Agriculture

IAS 41

30

First-time Adoption of Indian Accounting Standards

IFRS 1

Ind AS 101

31

Share-based Payment

IFRS 2

Ind AS 102

32

Business Combinations, Amalgamations

IFRS 3

Ind AS 103

AS 14

33

Insurance Contracts

IFRS 4

Ind AS 104

34

Non-current Assets Held for Sale and Discontinued (Accounting for Fixed Assets)

IFRS 5

Ind AS 105

AS 10

35

EOxploration for and Evaluation of Mineral Resources

IFRS 6

Ind AS 106

36

Financial Instruments: Disclosures

IFRS 7

Ind AS 107

AS 32

37

Operating Segments Reporting

IFRS 8

Ind AS 108

AS 17

38

Financial Instruments

IFRS 9

I invite suggestions, comments and criticism on the same from all the experts, mentors, seniors, professionals, colleagues and friends.

Regards

Chirag Shah

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7 Comments

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  1. Ravi Sankar Venna

    Thanks Chirag.

    It is really a good article, somehow I missed it.

    This would be really handy for accounting and finance professional. Keep it up.

    Keep contributing on SCN.

    Best Regards,

    Ravi

    (0) 
    1. Chirag Shah Post author

      Thank You Sir for appreciating efforts and for the motivation.

      Sharing knowledge has helped mankind survive and evolve into the intelligent and productive species he is today. In the animal kingdom and indeed in business, knowledge sharing can make the difference between survival and extinction.

      At the same time

      It is good to rub, and polish our brain against that of others.

      – Michel Eyquem de Montaigne


      😆 😆 😆


      Regards

      Chirag



      (0) 
  2. Ranu Eugene

    Thanks a ton Chirag for such a wonderful document.

    It will indeed help the accounting and finance professionals.

    Keep up the good work. 🙂

    Best of Luck 🙂

    Regards

    Eugene

    (0) 
  3. Rakesh Shah

    Dear Chirag

    This is really helpful.  However I request to provide information for how to convert and for cut-over process and comparison reporting.

    Thanks

    Rs

    (0) 
    1. Chirag Shah Post author

      Hi Rakesh,

      Thanks for appreciation.

      SO far as I understand, there is no need to convert your data nor it requires cut over process.

      You just need to define parallel Chart of account and link it with your operational chart of account.

      As mentioned in blog you need to define

      • Operative chart of account is to be designed as per company policies,
      • Country chart of account is to be designed as per GAAP and
      • Group chart of account is to be designed as per IAS / IFRS.


      This applies only to those companies who has overseas operation in multiple countries, otherwise this can be achieved by designing multiple Financial Statement Versions also.

      Regards

      Chirag

      (0) 

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