Chapter 1: Introduction to Accounting Standard

Theory Notes

1. INTRODUCTION
Accounting Standards (ASs) are written policy documents issued by the Government with the support
of other regulatory bodies (e.g., Ministry of Corporate Affairs (MCA) issuing Accounting Standards for
corporates in consultation with National Advisory Committee on Accounting Standards (NACAS))
covering the aspects of recognition, measurement, presentation and disclosure of accounting
transactions in the financial statements. The ostensible purpose of the standard setting bodies is to
promote the dissemination of timely and useful financial information to investors and certain other
stakeholders having an interest in the company’s economic performance. Accounting Standards reduce
the accounting alternatives in the preparation of financial statements within the bounds of rationality,
thereby, ensuring comparability of financial statements of different enterprises.

Accounting Standards deal with the following:

(i) recognition of events and transactions in the financial statements,
(ii) measurement of these transactions and events,
(iii) presentation of these transactions and events in the financial statements in a manner that is
meaningful and understandable to the reader, and
(iv) the disclosure relating to these transactions and events to enable the public at large and the
stakeholders and the potential investors in particular, to get an insight into what these financial
statements are trying to reflect and thereby facilitating them to take prudent and informed
business decisions.

Accounting Standards standardize diverse accounting policies with a view to

(i) Eliminate the non-comparability of financial statements and thereby improving the reliability of
financial statements, to the maximum possible extent, and
(ii) Provide a set of standard accounting policies, valuation norms and disclosure requirements.
The standard policies are intended to reflect a consensus on accounting policies to be used in different
identified area, e.g. inventory valuation, capitalisation of costs, depreciation and amortisation, etc. Since
it is not possible to prescribe a single set of policies for any specific area that would be appropriate for
all enterprises, it is not enough Wto comply with the standards and state that they have been followed.
In other words, one must also disclose the accounting policies used in preparation of financial
statements. (See AS 1, Disclosure of Accounting Policies given in Appendix I of this Module)

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In addition to improving credibility of accounting data, standardisation of accounting procedures
improves comparability of financial statements, both intra-enterprise and inter-enterprise. Such
comparisons are very effective and most widely used tools for assessment of enterprise’s financial
health and performance by users of financial statements for taking economic decisions, e.g., whether or
not to invest, whether or not to lend and so on.
Another advantage of standardisation is reduction of scope for creative accounting. The creative
accounting refers to twisting of accounting policies to produce financial statements favourable to a
particular interest group. For example, it is possible to overstate profits and assets by capitalising
revenue expenditure or to understate them by writing off a capital expenditure against revenue of
current accounting period. Such practices can be curbed only by framing policies for capitalisation,
particularly for the borderline cases where it is possible to have divergent views. The accounting
standards provide adequate guidance in this regard.
In brief, the accounting standards aim at improving the quality of financial reporting by promoting
comparability, consistency and transparency, in the interests of users of financial statements.

2. STANDARDS SETTING PROCESS

The Institute of Chartered Accountants of India (ICAI), being a premier accounting body in the country,
took upon itself the leadership role by constituting the Accounting Standards Board (ASB) in 1977. The
ICAI has taken significant initiatives in the issuing of Accounting Standards to ensure that the standard-
setting process is fully consultative and transparent. The ASB considered the International Accounting
Standards (IASs)/ International Financial Reporting Standards (IFRSs) while framing Indian
Accounting Standards (ASs) and tried to integrate them, in the light of the applicable laws, customs,
usages and business environment in the country. The composition of ASB includes representatives of
industries (namely, ASSOCHAM, CII, FICCI), regulators, academicians, government departments, etc.
Although ASB is a body constituted by the Council of the ICAI, it (ASB) is independent in the
formulation of accounting standards and Council of the ICAI is not empowered to make any
modifications in the draft accounting standards formulated by ASB without consulting with the ASB. It
may be noted that ASB is a committee under Institute of Chartered Accountants of India (ICAI) which
consists of representatives from government department, academicians, other professional bodies viz.
icsi, icai, representatives from ASSOCHAM, CII, FICCI, etc. National Advisory Committee on Accounting
Standards (NACAS) recommend these standards to the Ministry of Corporate Affairs (MCA). MCA has to
spell out the accounting standards applicable for companies in India.
The standard-setting procedure of Accounting Standards Board (ASB) can be briefly outlined as
follows:
• Identification of broad areas by ASB for formulation of AS.
• Constitution of study groups by ASB to consider specific projects and to prepare preliminary drafts of
the proposed accounting standards. The draft normally includes objective and scope of the
standard, definitions of the terms used in the standard, recognition and measurement principles
wherever applicable and presentation and disclosure requirements.
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• Consideration of the preliminary draft prepared by the study group of ASB and revision, if any, of
the draft on the basis of deliberations.
• Circulation of draft of accounting standard (after revision by ASB) to the Council members of the
ICAI and specified outside bodies such as Ministry of Corporate Affairs (DCA), Securities and
Exchange Board of India (SEBI), Comptroller and Auditor General of India (C&AG), Central Board of
Direct Taxes (CBDT), Standing Conference of Public Enterprises (SCOPE), etc. for comments.
• Meeting with the representatives of the specified outside bodies to ascertain their views on the draft
of the proposed accounting standard.
• Finalisation of the exposure draft of the proposed accounting standard and its issuance inviting
public comments.
• Consideration of comments received on the exposure draft and finalisation of the draft accounting
standard by the ASB for submission to the Council of the ICAI for its consideration and approval for
issuance.
• Consideration of the final draft of the proposed standard and by the Council of the ICAI, and if found
necessary, modification of the draft in consultation with the ASB is done.
• The accounting standard on the relevant subject (for non-corporate entities) is then issued by the
ICAI. For corporate entities the accounting standards are issued by The Central Government of
India.
The procedure explained above can be categorized into 8 steps:

1. Identification of area
2. Constitution of study group
3. Preparation of draft and its circulation
4. Ascertainment of views of different bodies on draft
5. Finalisation of exposure draft (E.D)
6. Comments received on exposure draft (E.D)
7. Modification of the draft
8. Issue of AS

Earlier, ASB used to issue Accounting Standard Interpretations which address questions that arise in
course of application of standard. These were, therefore, issued after issuance of the relevant standard.
Authority of the accounting standard interpretation (ASIs) was same as that of the accounting standard
(AS) to which it relates. However, after notification of Accounting Standards by the Central Government
for the companies, where the consensus portion of ASI was merged as ‘Explanation’ to the relevant
paragraph of the Accounting Standard, the Council of ICAI also decided to merge the consensus portion
of ASI as ‘Explanation’ to the relevant paragraph of the Accounting Standard issued by them. This
initiative was taken by the Council of the ICAI to harmonise both the set of standards, i.e., Accounting
Standards issued by the ICAI and Accounting Standards notified by the Central Government.

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3. BENEFITS OF ACCOUNTING STANDARDS
Accounting Standards seek to describe the accounting principles, the valuation techniques and the
methods of applying the accounting principles in the preparation and presentation of financial
statements so that they may give a true and fair view.
The following are the benefits of Accounting Standards:
(i) Standardisation of alternative accounting treatments: Accounting Standards reduce to a
reasonable extent or eliminate altogether confusing variations in the accounting treatment
followed for the purpose of preparation of financial statements.
(ii) Requirements for additional disclosures: There are certain areas where important information
is not statutorily required to be disclosed. Standards may call for disclosure beyond that
required by law.
(iii) Comparability of financial statements: The application of accounting standards would facilitate
comparison of financial statements of different companies situated in India and facilitiate
comparison, to a limited extent, of financial statements of companies situated in different parts
of the world. However, it should be noted in this respect that differences in the institutions,
traditions and legal systems from one country to another give rise to differences in Accounting
Standards adopted in different countries.
Since Accounting Standards are principle based, application of Accounting Standards becomes
judgemental in case of complex business transactions. Accounting Standards have to be read in line
with the legal requirements, i.e., in case of any conflict, Statute would prevail over Accounting
Standards.

4. HOW MANY ACCOUNTING STANDARDS?

The Council of the Institute of Chartered Accountants of India has, so far, issued twenty nine Accounting
Standards. However, AS 6 on ‘Depreciation Accounting’ has been withdrawn on revision of AS 10
‘Property, Plant and Equipment*’ and AS 8 on ‘Accounting for Research and Development’ has been
withdrawn consequent to the issuance of AS 26 on ‘Intangible Assets’. Thus effectively, there are 27
Accounting Standards at present. The ‘Accounting Standards’ issued by the Accounting Standards Board
establish standards which have to be complied by the business entities so that the financial statements
are prepared in accordance with generally accepted accounting principles.
The following is the list of Accounting Standards with their respective date of applicability:

AS AS Date
No.
1 Tit
Disclosure of Accounting Policies 01/04/1993
2 le
Valuation of Inventories (Revised) 01/04/1999
3 Cash Flow Statement 01/04/2001
4 Contingencies and Events Occurring after the
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 Balance Sheet Date (Revised) 01/04/1998
5 Net Profit or Loss for the Period, Prior Period Items
and Changes in Accounting Policies 01/04/1996
6 Depreciation Accounting Withdrawn w.e.f 1.4.2016 after
issuance of revised AS 10 on PPE
7 Construction Contracts 01/04/2002
8 Research & Development Now included in AS 26
9 Revenue Recognition 01/04/1993
10 Property, Plant and Equipment (Revised) 01/04/2016
11 The Effects of Changes in Foreign Exchange Rates 01/04/2004
12 Accounting for Government Grants 01/04/1994
13 Accounting for Investments (Revised) 01/04/1995
14 Accounting for Amalgamations (Revised) 01/04/1995
15 Employee Benefits 01/04/2006
16 Borrowing Costs 01/04/2000
17 Segment Reporting 01/04/2001
18 Related Party Disclosures 01/04/2001
19 Leases 01/04/2001
20 Earnings Per Share 01/04/2001
21 Consolidated Financial Statements (Revised) 01/04/2001
22 Accounting for Taxes on Income 01/04/2006
23 Accounting for Investments in Associates in 01/04/2002
24 Consolidated Financial
Discontinuing Statements
Operations 01/04/2004
25 Interim Financial Reporting 01/04/2002
26 Intangible Assets 01/04/2003
27 Financial Reporting of Interests in Joint Ventures 01/04/2002
28 Impairment of Assets 01/04/2008
29 Provisions, Contingent Liabilities and Contingent 01/04/2004
Assets (Revised)

5. NEED FOR CONVERGENCE TOWARDS GLOBAL STANDARDS

The last decade has witnessed a sea change in the global economic scenario. The emergence of trans-
national corporations in search of money, not only for fuelling growth, but to sustain on-going activities
has necessitated raising of capital from all parts of the world, cutting across frontiers.
Each country has its own set of rules and regulations for accounting and financial reporting. Therefore,
when an enterprise decides to raise capital from the markets other than the country in which it is
located, the rules and regulations of that other country will apply and this in turn will require that the

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enterprise is in a position to understand the differences between the rules governing financial
reporting in the foreign country as compared to its own country of origin. Therefore translation and re-
instatements are of utmost importance in a world that is rapidly globalising in all ways. Further, the
accounting standards and principle need to be robust so that the larger society develops degree of
confidence in the financial statements, which are put forward by organisations.
The convergence of financial reporting and Accounting Standards is a valuable process that contributes
to the free flow of global investment and achieves substantial benefits for all capital market
stakeholders. It improves the ability of investors to compare investments on a global basis and, thus,
lower their risk of errors of judgment. It facilitates accounting and reporting for companies with global
operations and eliminates some costly requirements say reinstatement of financial statements. It has
the potential to create a new standard of accountability and greater transparency provides value to all
market participants including regulators. It reduces operational challenges for accounting firms and
focuses their value and expertise around an increasingly unified set of standards. It creates an
unprecedented opportunity for standard setters and other stakeholders to improve the reporting
model. For the companies with joint listings in both domestic and foreign country, the convergence is
very much significant.

6. INTERNATIONAL ACCOUNTING STANDARD BOARD

With a view of achieving these objectives, the London based group namely the International Accounting
Standards Committee (IASC), responsible for developing International Accounting Standards, was
established in June, 1973. It is presently known as International Accounting Standards Board (IASB),
The IASC comprises the professional accountancy bodies of over 75 countries (including the Institute
of Chartered Accountants of India). Primarily, the IASC was established, in the public interest, to
formulate and publish, International Accounting Standards to be followed in the presentation of
financial statements. International Accounting Standards were issued to promote acceptance and
observance of International Accounting Standards worldwide. The members of IASC have undertaken a
responsibility to support the standards promulgated by IASC and to propagate those standards in their
respective countries.
Between 1973 and 2001, the International Accounting Standards Committee (IASC) released
International Accounting Standards. Between 1997 and 1999, the IASC restructured their organisation,
which resulted in formation of International Accounting Standards Board (IASB). These changes came
into effect on 1st April, 2001. Subsequently, IASB issued statements about current and future standards;
IASB publishes its Standards in a series of pronouncements called International Financial Reporting
Standards (IFRS). However, IASB has not rejected the standards issued by the ISAC. Those
pronouncements continue to be designated as “International Accounting Standards” (IAS).

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7. INTERNATIONAL FINANCIAL REPORTING STANDARDS AS GLOBAL STANDARDS
The term International Financial Reporting Standards (IFRS) comprises IFRS issued by IASB; IAS issued
by International Accounting Standards Committee (IASC); Interpretations issued by the Standard
Interpretations Committee (SIC) and the IFRS Interpretations Committee of the IASB.
International Financial Reporting Standards (IFRSs) are considered a “principles-based” set of
standards. In fact, they establish broad rules rather than dictating specific treatments. Every major
nation is moving toward adopting them to some extent. Large number of authorities permits public
companies to use IFRS for stock-exchange listing purposes, and in addition, banks, insurance companies
and stock exchanges may use them for their statutorily required reports. So over the next few years,
number of companies will adopt the international standards. This requirement will affect thousands of
enterprises, including their subsidiaries, equity investors and joint venture partners.

8. BENEFITS OF CONVERGENCE WITH IFRS

There are many beneficiaries of convergence with IFRS such as the economy, investors, industry, etc.
The Economy: When the markets expand globally the need for convergence increases since the
convergence benefits the economy by increasing growth of its international business. It facilitates
maintenance of orderly and efficient capital markets and also helps to increase the capital formation
and thereby economic growth. It encourages international investing and thereby leads to more foreign
capital flows to the country.
Investors: Investors want the information that is more relevant, reliable, timely and comparable across
the jurisdictions. Financial statements prepared using a common set of Accounting Standards help
investors better understand investment opportunities as opposed to financial statements prepared
using a different set of national Accounting Standards. Investors’ confidence is strong when Accounting
Standards used are globally accepted. Convergence with IFRS contributes to investors’ understanding
and confidence in high quality financial statements
The Industry: A major force in the movement towards convergence has been the interest of the
industry. The industry is able to raise capital from foreign markets at lower cost if it can create
confidence in the minds of foreign investors that their financial statements comply with globally
accepted Accounting Standards. With the diversity in Accounting Standards from country to country,
enterprises which operate in different countries face a multitude of accounting requirements prevailing
in the countries.

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9. CONVERGENCE TO IFRS IN INDIA
In the scenario of globalisation, India cannot insulate itself from the developments taking place
worldwide. In India, so far as the ICAI and the Government authorities such as the National Advisory
Committee on Accounting Standards established under the Companies Act, 1956, and various
regulators such as Securities and Exchange Board of India and Reserve Bank of India are concerned, the
aim has always been to comply with the IFRS to the extent possible with the objective to formulate
sound financial reporting standards. The ICAI, being a member of the International Federation of
Accountants
(IFAC), considered the IFRS and tried to integrate them, to the extent possible, in the
light of the laws, customs, practices and business environment prevailing in India.
Also, the recent stream of overseas acquisitions by Indian companies makes a compelling case for
adoption of high quality standards to convince foreign enterprises about the financial standing as also
the disclosure and governance standards of Indian acquires.
For convergence of Indian Accounting Standards with International Financial Reporting Standards
(IFRS), the Accounting Standard Board in consultation with the Ministry of Corporate Affairs (MCA)),
has decided that there will be two separate sets of Accounting Standards viz. (i) Indian Accounting
Standards converged with the IFRS–standards which are being converged by eliminating the
differences of the Indian Accounting Standards vis-à-vis IFRS (known as Ind AS) and (ii) Existing
Notified Accounting Standards.

10. WHAT ARE INDIAN ACCOUNTING STANDARD (IND AS)?

Indian Accounting Standards (Ind AS) are IFRS converged standards issued by the Central Government
of India under the supervision and control of Accounting Standards Board (ASB) of ICAI and in
consultation with National Advisory Committee on Accounting Standards (NACAS).
Ind AS are named and numbered in the same way as the corresponding International Financial
Reporting Standards (IFRS).

Indian Accounting Standard

Globalization and Transparency of Comparability of Enhanced Disclosure
Libreralization financial statements financial statements requirements

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11. SIGNIFICANCE OF IND AS (IFRS CONVERGED STANDARDS)
A number of multi-national companies are establishing their businesses in various countries with
emerging economies and vice versa. The entities in emerging economies are increasingly accessing the
global markets to fulfill their capital needs by getting their securities listed on the stock exchanges
outside their country. Capital markets are, thus, becoming integrated consistent with this world-wide
trend. More and more Indian companies are being listed on overseas stock exchanges. The use of
different accounting frameworks in different countries, which require inconsistent treatment and
presentation of the same underlying economic transactions, creates confusion for users of financial
statements. This confusion leads to inefficiency in capital markets across the world. Therefore,
increasing complexity of business transactions and globalisation of capital markets call for a single set
of high quality accounting standards.
High standards of financial reporting underpin the trust investors place in financial and non-financial
information. Thus, the case for a single set of globally accepted accounting standards has prompted
many countries to pursue convergence of national accounting standards with IFRS.

12. HISTORY OF IFRS - CONVERGED INDIAN ACCOUNTING STANDARDS (IND AS)

First Step towards IFRS

The Institute of Chartered Accountants of India (ICAI) being the accounting standards- setting body in
India, way back in 2006, initiated the process of moving towards the International Financial Reporting
Standards(IFRS) issued by the International Accounting Standards Board (IASB) with a view to enhance
acceptability and transparency of the financial information communicated by the Indian corporates
through their financial statements. This move towards IFRS was subsequently accepted by the
Government of India.
The Government of India in consultation with the ICAI decided to converge and not to adopt IFRS
issued by the IASB. The decision of convergence rather than adoption was taken after the detailed
analysis of IFRS requirements and extensive discussion with various stakeholders. Accordingly, while
formulating IFRS converged Indian Accounting Standards (Ind AS), efforts have been made to keep
these Standards, as far as possible, in line with the corresponding IAS/IFRS and departures have been
made where considered absolutely essential. These changes have been made considering various
factors, such as, various terminology related changes have been made to make it consistent with the
terminology used in law, e.g., ‘statement of profit and loss’ in place of ‘statement of profit and loss and
other comprehensive income’ and ‘balance sheet’ in place of ‘statement of financial position’. Certain
changes have been made considering the economic environment of the country, which is different as
compared to the economic environment presumed to be in existence by IFRS.

Government of India - Commitment to IFRS Converged Ind AS

Initially Ind AS were expected to be implemented from the year 2011. However, keeping in view the

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fact that certain issues including tax issues were still to be addressed, the Ministry of Corporate Affairs
decided to postpone the date of implementation of Ind AS.
In July 2014, the Finance Minister of India at that time, Shri Arun Jaitely ji, in his Budget Speech,
announced an urgency to converge the existing accounting standards with the International Financial
Reporting Standards (IFRS) through adoption of the new Indian Accounting Standards (Ind AS) by the
Indian companies.
Pursuant to the above announcement, various steps have been taken to facilitate the implementation of
IFRS - converged Indian Accounting Standards (Ind AS). Moving in this direction, the Ministry of
Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Rules, 2015 vide
Notification dated February 16, 2015 covering the revised roadmap of implementation of Ind AS for
companies other than Banking companies, Insurance Companies and NBFCs and Indian Accounting
Standards (Ind AS). As per the Notification, Indian Accounting Standards (Ind AS) converged with
International Financial Reporting Standards (IFRS) shall be implemented on voluntary basis from 1st
April, 2015 and mandatorily from 1st April, 2016. Separate road-maps have been prescribed for
implementation of Ind AS to Banking, Insurance companies and NBFCs respectively.

13. WHAT ARE CARVE OUTS/INS IN IND AS?

While formulating IFRS converged Indian Accounting Standards (Ind AS), efforts have been made to
keep these Standards, as far as possible, in line with the corresponding IAS/IFRS and departures have
been made where considered absolutely essential. These changes have been made considering various
factors, such as
 Various terminology related changes have been made to make it consistent with the terminology
used in law, e.g., ‘statement of profit and loss’ in place of ‘statement of comprehensive income’ and
‘balance sheet’ in place of ‘statement of financial position’.
 Removal of options in accounting principles and practices in Ind AS vis-a-vis IFRS, have been made
to maintain consistency and comparability of the financial statements to be prepared by following
Ind AS. However, these changes will not result into carve outs.
 Certain changes have been made considering the economic environment of the country, which is
different as compared to the economic environment presumed to be in existence by IFRS. These
differences are due to differences in economic conditions prevailing in India. These diffferences
which are in deviation to the accounting principles and practices stated in IFRS, are commonly
known as ‘Carve-outs’.

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14. LIST OF IND AS
The following is the list of Ind AS vis-a-vis IFRS and AS:
Ind AS IFRS Title of Ind AS/IFRS AS/GN AS/GN Title
101 1 First Time Adoption of Indian - -
Accounting Standards
102 2 Share Based Payment GN 18 Guidance Note on Accounting for
Employee Share-based Payments
103 3 Business Combinations AS 14 Accounting for Amalgamations
104 4 Insurance Contracts - -
105 5 Non-current Assets Held for Sale AS 24 Discontinuing Operations
and Discontinued Operations
106 6 Exploration for and Evaluation of GN 15 Guidance Note on Accounting for
Mineral Resources Oil and Gas Producing Activities
107 7 Financial Instruments: Disclosures
108 8 Operating Segments AS 17 Segment Reporting
109 9 Financial Instruments
110 10 Consolidated Financial Statements AS 21 Consolidated Financial
Statements
111 11 Joint Arrangements AS 27 Financial Reporting of Interests
in Joint Ventures
112 12 Disclosure of Interests in Other - -
Entities
113 13 Fair Value Measurement - -
114 14 Regulatory Deferral Accounts GN Accounting for Rate Regulated
Activities
1 1 Presentation of Financial AS 1 Disclosure of Accounting Policies
Statements

2 2 Inventories AS 2 Valuation of Inventories

7 7 Statement of Cash Flows AS 3 Cash Flow Statements
8 8 Accounting Policies, Changes in AS 5 Net Profit or Loss for the Period,
Accounting Estimates and Errors Prior period Items and Changes
in Accounting Policies
10 10 Events after the Reporting Period AS 4 Contingencies and Events
Occurring After the Balance Sheet
Date
11 11 Construction Contracts AS 7 Construction Contracts
12 12 Income Taxes AS 22 Accounting for Taxes on Income
16 16 Property, Plant and Equipment AS 10 Property, Plant and Equipment
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 17 17 Leases AS 19 Leases
18 18 Revenue AS 9 Revenue Recognition
19 19 Employee Benefits AS 15 Employee Benefits
20 20 Accounting for Government AS 12 Accounting for Government
Grants and Disclosure of Grants
Government Assistance
21 21 The Effects of Changes in Foreign AS 11 The Effects of Changes in Foreign
Exchange Rates Exchange Rates

23 23 Borrowing Costs AS 16 Borrowing Costs

24 24 Related Party Disclosures AS 18 Related Party Disclosures
27 27 Separate Financial Statements - -
28 28 Investment in Associates and Joint AS 23 Accounting for Investment in
Ventures Associates in Consolidated
Financial Statements
29 29 Financial Reporting in - -
Hyperinflationary Economies
32 32 Financial Instruments: Presentation
33 33 Earnings per Share AS 20 Earnings per Share
34 34 Interim Financial Reporting AS 25 Interim Financial Reporting
36 36 Impairment of Assets AS 28 Impairment of Assets
37 37 Provisions, Contingent Liabilities AS 29 Provisions, Contingent Liabilities
38 38 and Contingent
Intangible Assets
Assets AS 26 and Contingent
Intangible Assets
Assets
40 40 Investment Property AS 13 Accounting for Investments
41 41 Agriculture - -

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15. ROADMAP FOR IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (IND AS): A
SNAPSHOT

For Companies other than banks, NBFCs and Insurance Companies

1st April 2015 or thereafter: Voluntary Basis for all companies (with Comparatives)

Phase I 1st April 2016: Mandatory Basis

(a) Companies listed/in process of listing on Stock Exchanges in India or

Outside India having net worth > INR 5 Billion
(b) Unlisted Companies having net worth > INR 5 Billion
(c) Parent, Subsidiary, Associate and J.V. of above

Phase II 1st April 2017: Mandatory Basis

(d) All companies which are listed/or in process of listing inside or outside India on Stock
Exchanges not covered in Phase I (other than companies listed on SME Exchanges)
(e) Unlisted companies having net worth INR 5 Billion > INR 2.5 Billion
(f) Parent, Subsidiary, Associate and J.V. of Above

 Companies listed on SME exchange not required to apply Ind AS.

 Once Ind AS are applicable, an entity shall be required to follow the Ind AS for all
the subsequent financial statements.
 Companies not covered by the above roadmap shall continue to apply existing Accounting
Standards notified in Companies (Accounting Standards) Rules, 2006.

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For Scheduled Commercial Banks (Excluding RRBs), Insurers/Insurance Companies and Non-
Banking Financial Companies (NBFC’s)

Non-Banking Financial Companies (NBFC’s)

Phase I: From 1st April, 2018 (with comparatives)

• NBFCs (whether listed or unlisted) having net worth 500 crore or more
• Holding, Subsidiary, JV and Associate companies of above NBFC other than those
already covered under corporate roadmap shall also apply from said date

Phase II: From 1st April, 2019 (with comparatives)

• NBFCs whose equity and/or debt securities are listed or are in the process of listing
on any stock exchange in India or outside India and having net worth less than 500
crore
• NBFCs that are unlisted having net worth 250 crore or more but less 500 crore
• Holding, Subsidiary, JV and Associate companies of above other than those already
covered under corporate roadmap shall also apply from said date

 Applicable for both Consolidated and individual Financial Statements

 NBFC having net worth below 250 crore shall not apply Ind AS.
 Adoption of Ind AS is allowed only when required as per the roadmap.
 Voluntary adoption of Ind AS is not allowed.

Scheduled Commercial banks (excluding RRB’s) and Insurers/Insurance companies

 From 1st April, 2018 (with comparatives):

• Holding, subsidiary, JV and Associates companies of scheduled commercial banks

(excluding RRB’s) shall also apply from the said date irrespective of it being covered
under corporate roadmap.
• Applicable for both Consolidated and individual Financial Statements
 Urban Cooperative banks (UCBs) and Regional Rural banks (RRBs) are not required to
apply Ind AS.

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