Indian GAAP (Generally Accepted Accounting Principles) is commonly referred to as IGAAP or simply Indian Accounting Standards (not to be confused with the new Ind-AS). It represents the older, local accounting standards issued by the Institute of Chartered Accountants of India (ICAI) before the mandatory adoption of converged Indian Accounting Standards (Ind-AS).
GAAP is primarily used in the U.S., while many other countries follow International Financial Reporting Standards (IFRS). In India, most companies use Indian GAAP for their accounting records.
Unlike Indian GAAP and IFRS, there is no exemption or relaxation in complying with US GAAP requirements except certain relaxations for non-public companies. The accounting standards may have differing date of implementation for public entities and non-public entities.
Whereas IFRS was drafted to become a truly international standard, IND AS is incorporating amendments necessary because of the existing tax statutes and related regulatory provisions of India. For example, the accounting treatment of leases and financial instruments could be different due to local legal requirements.
IFRS is issued by the International Accounting Standards Board (IASB). GAAP refers to a common set of accounting standards and procedures that a company must follow at the time of preparation of financial statements.
While IAS/IFRS represents a "common language" for the European community, U.S. GAAP is, on the other hand, the set of principles that listed companies in the United States must adhere to when preparing financial statements.
A: No, all companies in India don't need to adopt IFRS/Ind AS. However, listed companies and certain unlisted companies must adopt Ind AS. Banks, insurance companies, and non-banking financial companies are also required to adopt Ind AS as per the timelines specified by the RBI and IRDAI.
Ind AS provides a clear and consistent framework for accounting practices, reducing ambiguity and simplifying financial reporting. Ind AS ensures that companies follow standardized accounting practices, promoting consistency and comparability across industries.
IFRS 9 replaced IAS 39 in January 2018 because it was too complex, inconsistent, and impractical in a modern financial world. Accountants, regulators, and financial institutions often call IAS 39 one of the most confusing standards ever written.
IFRS 3 excludes from its scope common control business combinations. Ind AS 103 requires business combinations of entities or businesses under common control to be mandatorily accounted using the pooling of interest method.
The ICAI focuses on maintaining professional competence, supporting its members' development, and providing valuable guidance on technical matters. Meanwhile, the NFRA ensures independent oversight and acts against recalcitrant auditors and financial reporting.
IFRS 16 and Ind AS 116 apply a single-model approach for lessees, resulting in front-loaded expense patterns and EBITDA increases, whereas ASC 842 retains a dual model, preserving straight-line expense recognition for operating leases and creating cross-framework EBITDA differences.
IFRS 9: Comprehensive guidance on the classification, measurement, and impairment of financial instruments. Ind AS 109: Mirrors IFRS 9 but with differences in areas such as financial guarantees and treatment of foreign currency convertible bonds.
Rules-Based. US GAAP: The US accounting framework is known for its rules-based approach, offering detailed and specific guidelines for financial reporting. Ind AS: Indian accounting standards adopt a principles-based approach, providing broader guidelines and allowing for professional judgment in their application.
Indian Accounting Standard (abbreviated as Ind_AS) is the accounting standard adopted by companies in India and issued under the supervision of Accounting Standards Board (ASB) which was constituted as a body in the year 1977.
Yes, businesses in India can choose between cash and accrual accounting for profits and gains from business, as well as income from other sources (under Section 145 of the Income Tax Act).
Declaring (and rightfully so) that their main goal is to protect US investors' interests, the SEC notes that IFRS lacks consistent application, allows too much leeway with judgment, and is underdeveloped in many specific areas, for which the US GAAP has detailed and accepted guidance and established practice ( ...
The four pillars of IFRS S1 and S2 are governance, strategy, risk management and metrics and targets.
IFRS offers broader international adoption and flexibility, while US GAAP provides strict, detailed rules—useful in highly regulated environments.
Similarities Between IFRS and GAAP
It includes the objectives, elements, and accounting characteristics. Both standards use statements of cash flows, balance sheets, and income statements. They also provide the same guidelines when organizations manage cash and cash equivalents.
Main Types Of Accounting You Can Specialize In
Indian standard is related with presentation of financial statements. Accounting Standard -1 is related to the disclosure of accounting policies. The Indian accounting standard is wider when compared with AS-1.
GAAP stands for generally accepted accounting principles. GAAP is a set of rules for standardized financial reporting that help ensure accuracy and transparency. Organizations like publicly traded companies and government agencies must follow GAAP, which adapts to economic changes.
IAS covers only specific accounting issues, while IFRS is a more comprehensive set of accounting standards that covers all aspects of financial reporting. IAS and IFRS are sets of accounting standards that provide guidelines for financial reporting.
As a general rule most companies around the world can choose whether they want to report under US GAAP or IFRS. US companies based overseas can use IFRS and overseas companies based in the US can still use IFRS rather than GAAP. Much of US GAAP and IFRS is very similar.