Differences Between IFRS vs Indian GAAP

If you’re just starting out in accounting, it would be difficult for you to understand the differences between IFRS and Indian GAAP.

The full form of IFRS is the International Financial Reporting Standards. It was prepared and updated by the IASB (International Accounting Standards Board), a non-profit, independent organization. IFRS is used in 110 countries, and it’s one of the most popular accounting standards.

On the other hand, Indian GAAP is a set of accounting standards that are specifically designed for the Indian context. GAAPGAAPGAAP (Generally Accepted Accounting Principles) are standardized guidelines for accounting and financial reporting.read more stands for Generally Accepted Accounting Principles. Most Indian companies follow Indian GAAP while preparing their accounting records.

When a company follows IFRS, it needs to provide disclosure in the form of a note that it is complying with the IFRS. But for Indian GAAP, the disclosure of the statementDisclosure Of The StatementDisclosure Statement is an official document that is part of a list of documents issued by a person, an organization, or the government and contains various key and relevant information in a non-technical language for the communication of contract terms to other parties or contractees, who are typically naive to jargons.read more isn’t mandatory. When a company is said to follow the Indian GAAP, it’s assumed that they’re complying with the Indian GAAP to portray the true and fair view of their financial affairs.

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IFRS vs Indian GAAP Infographics

Key Differences Between IFRS vs. Indian GAAP

The most relevant differences between IFRS and Indian GAAP are mentioned –

  • IFRS is a much broader accounting standard in terms of scope and application. IFRS has been used by 110 countries already. Indian GAAP is quite narrow and is only applicable for the IndianFor IFRS, the companies may need to prepare consolidated financial statements if they don’t fall under the exemption of IAS-27 (Para 10). As per Indian GAAP, a company doesn’t need to prepare consolidated statements.As per IFRS, the companies need to disclose as a note that they’re complying with the IFRS. But in the case of Indian GAAP, there’s no need for a statement disclosing that the company is complying with Indian GAAP.Revenue is always considered as the fair value of the consideration receivable or received in the case of IFRS. As per Indian GAAP, on the other hand, revenue is considered when the companies charge for products/services and also the benefits companies receive by using their resources.As per IFRS, if the company isn’t functional currencyFunctional CurrencyThe term functional currency represents the currency of the location in which business operates primarily, earns a significant portion of revenue, and incurs the cost to generate such profits. In short, it is the home currency of that country where the corporate headquarter is situated.read more, then the assets and liabilities of the company would be converted by the exchange rate. On the other hand, Indian GAAP doesn’t require an exchange rate since it’s only applicable for Indian companies.

Head to Head Comparison Between IFRS vs. Indian GAAP

There are many differences between IFRS and Indian GAAP. Let’s have a look at the chief differences between these two –

Conclusion – IFRS vs. Indian GAAP

The most critical part of these two IFRS vs. Indian GAAP accounting standards is the context. In this context, we are using these to make a huge difference. Plus, by looking at these two IFRS vs. Indian GAAP, we get an idea about the benchmark each of these IFRS vs. Indian GAAP accounting standards has set for themselves.

What works in India may not work in other countries and vice-versa. That’s why the applicability of both of these IFRS vs. Indian GAAP standards stays relevant in respective contexts.

Video on IFRS vs. Indian GAAP

This has been a guide to the top differences between IFRS and Indian GAAP. Here we take the differences between the two with examples, infographics, and comparative table. You may also have a look at the following articles to learn more –

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