ifrs vs indian gaap vs us gaap

International Financial Reporting Standards(IFRS)

vs.Generally Accepted

Accounting Standards (GAAP)

presented by Group No. 5(Roll nos.2,4,12,16,17,26,44,45,54)

13th Aug 2014

What Is IFRS, Indian GAAP & US GAAP?

International Financial Reporting Standards(IFRS)

• An independent, non- profit organization• A set of international accounting standards.• States how particular types of transactions and other

events should be reported in financial statements.• Issued by the International Accounting Standards Board

(IASB).• progressively replacing the many different national

accounting standards.• Why? businesses are crossing their national

boundaries,promoting the synchronization of accounting standards across the globe

Advantges & Disadvantages

• Unified set of accounting and reporting standards

• To build a single global financial reporting language.

• High quality, transparent, understandable, globally enforceable

• Not being rule based, it may develop challenges at certain stages of implementation.

Generally Accepted Accounting Principles (GAAP)

• Common set of accounting principles, standards and procedures that companies use to compile their financial statements.

• GAAP are a combination of authoritative standards (set by policy boards)

• Commonly accepted ways of recording and reporting accounting information.

GAAP

What is INDIAN GAAP?

• a set of accounting standards.

• every company operating in India has to follow when reporting its financial results

• ICAI is the body in India that has set the Accounting standards(Indian Accounting Standards)

What is US GAAP?

• US has its own set of accounting Standards termed as US GAAP

• a non-US company when presenting its financial results in US has to follow US GAAP

INDIAN GAAP VS

US GAAP

INCOME STATEMENT Does not prescribe a standard format although expenditure is presented in one of two formats (function or nature). Certain minimum items are presented on face of income statement.

Does not prescribe a standard format but certain income ad expenditure items are disclosed in accordance with accounting standards and companies act.Industry specific formats are prescribed by industry regulations.

As a single step or multiple step format.Expenditures are presented by functions.SEC registrants should follow SEC regulations

TOPIC IFRS INDIAN GAAP U.S. GAAP

REVENUE RECOGNITION

• IFRS has two primary and three revenue focused standard interpretation laid without an exception to specific industries unlike US GAAP where the guidance is industry specific.

• absence of standard guidelines in Indian GAAP allows varied practices to be followed by corporate which may not comply with IFRS and the US GAAP

Topics IFRS Indian GAAP US GAAP

Revenue Recognition

Revenue is recognized on various criteria such as when risk, rewards & control have been transferred to buyers & revenue can be measured reliably

Several differences in detail even in the criteria defined for revenue

Principally more or less similar to IFRS. US GAAP has more than hundred standards on revenue & industry specific.

CASHFLOW STATEMENT

IFRS US GAAP INDIAN GAAP

•in flow and outflow of cash can be reported by direct or indirect methods where indirect method is commonly used (non cash items like depreciation included)

• also uses both methods where indirect is commonly used.

•used direct and indirect methods. indirect method for listed enterprises and direct method (cash from aggregated cash receipts) for insurance companies.

Finance minister Arun Jaitley made it clear that “Indian Accounting Standards have to converge with International Financial Reporting Standards (IFRS) by 2016-17”