Certainly! Here’s a detailed comparison between International Financial Reporting Standards (IFRS) and Indian Generally Accepted Accounting Principles (GAAP):
| Aspect | IFRS | Indian GAAP |
|---|---|---|
| Meaning of the abbreviation | International Financial Reporting Standards | Generally Accepted Accounting Principles (GAAP) in India |
| Developed by | International Accounting Standards Board (IASB) | Ministry of Corporate Affairs (MCA) |
| Disclosure | Requires disclosure that financial statements comply with IFRS | Presumed compliance; no explicit disclosure required |
| Adoption | Adopted by 110+ countries; widely accepted globally | Adopted only by Indian companies |
| First-time adoption guidance | Clear guidance provided by IFRS 1 | No specific guidance provided |
| Currency presentation | Requires conversion using exchange rates if not in functional currency | Only applicable within the Indian context |
| Consolidated financial statements | Required unless specific exemption criteria (IAS 27) apply | Individual financial statements required; no consolidation |
| Types of financial statements | Balance sheet and income statement (statement of comprehensive income) | Balance sheet, profit & loss account, cash flow statement |
| Revenue recognition | Revenue shown at fair value of consideration received or receivable | Revenue recognized based on products/services charged and benefits received |
| Scope and application | Broad application across various industries and jurisdictions | Narrow scope specifically for Indian companies |
Key Differences Explained:
- Development and Authority:
- IFRS: Developed by the IASB, adopted by over 110 countries, ensuring global acceptance.
- Indian GAAP: Developed under the Ministry of Corporate Affairs (MCA) for application within India.
- Disclosure:
- IFRS: Requires explicit disclosure in financial statements regarding compliance with IFRS.
- Indian GAAP: Compliance is presumed; no mandatory disclosure needed.
- Currency Presentation:
- IFRS: Requires assets and liabilities to be converted using exchange rates if not in functional currency.
- Indian GAAP: Only applicable in the Indian context, thus no exchange rate conversion required.
- Consolidated Financial Statements:
- IFRS: Requires companies to prepare consolidated financial statements unless specific exemptions apply.
- Indian GAAP: Focuses on individual financial statements with no mandatory consolidation.
- Types of Financial Statements:
- IFRS: Mandates the balance sheet and income statement (or statement of comprehensive income).
- Indian GAAP: Requires preparation of balance sheet, profit & loss account, and cash flow statement.
- Revenue Recognition:
- IFRS: Revenue recognized at fair value of consideration received or receivable.
- Indian GAAP: Revenue recognized based on charges for products/services and benefits received.
This comparison highlights how IFRS, being more principles-based and globally recognized, contrasts with Indian GAAP, which is more specific to Indian regulatory requirements and business practices. Adoption of Ind AS (Indian Accounting Standards converged with IFRS) reflects India’s move towards alignin