Navigating the implementation of Indian Accounting Standards (Ind AS)

The Indian Accounting Standards (Ind AS) were declared under Section 133 of the Companies Act 2013 and have been formulated to align with the IFRS standards issued by the IFRS Foundation. The objective of Ind AS is to establish principles for preparing and presenting consolidated financial statements when an entity regulates one or more other entities. The implementation of Ind AS aims to promote transparency and comparability of financial information and align India’s accounting practices with international standards. This article will delve into the what, why, and how of implementing Ind AS in an organization.

What is Ind AS?

Ind AS is a collection of accounting standards that have been formulated keeping in mind the legal environment and the Indian economy. These standards were first implemented in April 2015 and aim to supersede the existing company law and accounting practices. The goal is to ensure a fair representation of financial statements by segregating current and non-current assets on the balance sheets.

The three phases of implementing Ind AS

The implementation of Ind AS can be a complex process, and it is essential to understand the different phases involved. The first phase is the preparatory phase, which prepares a company for the changes. The second phase is the information collection phase, where companies gather information about their processes before making any changes. The third and final implementation phase is restructuring, where the company aligns itself with the new rules set by Ind AS. During this phase, processes are audited to ensure they comply with the new standards, and changes are made if necessary.???(Read also:?Guide for internal controls for financial reporting )

The benefits of implementing Ind AS

The?implementation of Ind AS ?provides numerous benefits to organizations, including greater transparency and comparability of financial information. Aligning with international standards ensures that financial statements are fairly represented, and companies can build a better reputation by demonstrating compliance with globally accepted accounting principles. The new accounting standards will also provide a level playing field for all companies, allowing them to compete more effectively globally.

The challenges of implementing Ind AS

The implementation of Ind AS has been challenging for many companies, especially small and medium-sized enterprises (SMEs). These SMEs make up 95% of India’s economic output and employment, and the change can significantly impact them. Accounting firms have struggled to prepare these businesses to transition from IFRS to Indian standards. To bridge the knowledge gap among SMEs, the Accounting Standards Board hosts Mumbai sessions focusing on current international accounting practices, tax implications under IFRS or Ind AS, and financial reporting under Ind AS.

The final declaration

Implementing Ind AS is essential for organizations that want to ensure transparency and comparability of financial information and align themselves with international accounting standards. The process involves three phases: preparatory, information collection, and restructuring. Implementing Ind AS brings numerous benefits, including increased transparency, better reputation, and a level playing field for companies to compete globally. However, the transition can be challenging, especially for SMEs, and the Accounting Standards Board is hosting sessions to help bridge the knowledge gap. By understanding what, why, and how of implementing Ind AS, organizations can be well-prepared to face the challenges and reap the benefits of this transition.

This content is meant for information only and should not be considered as an advice or opinion, or otherwise.?AKGVG & Associates ?does not intend to advertise its services through this.